Omicron-led volatility likely to weigh on markets for next 2 week - What should investors do?

Indian markets could witness some volatility in the next two weeks amid rising cases of new COVID variant Omicron not just in India but across the globe, suggest experts.

As the new covid variant continues to be a concern, the domestic market on Monday closed lower, as Sensex slipped over 1000 points from day's high level and Nifty closed below the important support of 17000-mark.

Omicron remained a concern as the variant spread to about one-third of US states, though there were reports from South Africa that cases there only had mild symptoms, said a Reuters report.

Back home, India recorded 8,306 new coronavirus cases in the last 24 hours, as per the data from the Ministry of Health and Family Welfare (MoHFW).

Read full coverage here - LIVE: Omicron variant cases, news in India - Amid surging Covid cases, Karnataka may stop exams, schools

The RBI Monetary Policy Committee (MPC) meeting is scheduled to start from today, December 6, 2021, and will continue till December 8, 2021 will also keep investors on the edge.

The Reserve Bank of India will hike its reverse repo rate early next year and increase its repo rate the following quarter, according to a Reuters poll of economists.

Read the full story here - RBI to hold rates at December meeting, hike early next year: Reuters poll

The Dec. 1-3 poll of 50 economists showed the RBI would hold its benchmark interest rate at 4.00% and the reverse repo rate at 3.35% at its Dec. 8 meeting.

The new covid variant that was initially detected in South Africa spread its legs in different parts of the world. As of now, more than 30 countries have detected the Omicron virus along with India.

In the last couple of days, the cases of the omicron virus have increased significantly. Reports suggest that the total tally has reached 21 cases in India, several states had reported omicron cases, recently Rajasthan has reported 9 cases of omicron virus, earlier Maharashtra, Hyderabad etc. has already reported several cases.

“Initial data from South Africa on Omicron suggest that the patients require less medical intervention during the recovery period. The WHO recently said that it will share more about this virus this week,” Yash Gupta, Equity Research Analyst, Angel One Ltd, said.

“If this virus quickly spreads in India, then the market will be volatile for the upcoming next two weeks, along with that any further development on the effectiveness of vaccines on new virus will be key monitorable for Indian markets,” added Gupta.

See Zee Business Live TV Streaming Below:

What should investors do?

The Nifty50 took support near 17000 levels before bouncing back on Monday. The index fell by over 1 per cent on Friday, as bulls struggle to remain in control.

On Friday, the Nifty50 started on a strong positive note and almost retested 17500 during the early trades, but bears were not willing to give up as they once again showed their dominance at higher levels to erase a major portion of weekly gains by ending a tad below 17200.

Traders can maintain stock specific approach as benchmark indices could remain volatile amid weak global cues, selling by foreign investors which have offloaded more than Rs 7000 cr in the cash segment of Indian equity markets in December, and any potential news of further lockdowns etc.

We are still in a ‘sell on a rise’ market as long as the index trades below 17900 levels on a closing basis. Traders should aim at booking timely profits in this market.

“Direction wise, we continue to remain cautious and there is no doubt we are still in a ‘Sell on rise’ kind of market. This view will remain intact as long as Nifty does not surpass 17900 which is the confluence point of two key trend lines,” Sameet Chavan (Chief Analyst-Technical and Derivatives, Angel One Ltd), said.

“As far as levels are concerned, 17350 – 17500 – 17600 are to be considered as immediate hurdles; whereas on the flipside, 17000 – 16800 should be treated as a cluster of support,” he said. We need to assess the situation in the coming week.

Chavan further added that traders can continue with a stock specific approach, but it would be a prudent strategy to keep booking timely profits and considering the volatile nature of global markets, carrying aggressive bets overnight should be strictly avoided.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)