Sensex above 57K! Use rallies to exit poor quality stocks, but stay cautious as Omicron still a threat, suggest experts

After a Manic Monday, investors woke up to strong global cues, which helped the Sensex to climb above the 57000 levels, while the Nifty50 also reclaimed 17100 levels on Tuesday.

At 11:30 am, the S&P BSE Sensex was trading with gains of over 800 points while the Nifty50 rose more than 200 points to reclaim 17150 levels.

See Zee Business Live TV Streaming Below:

Oversold Indian market levels, as well as a sharp rally seen in US markets overnight and the People's Bank of China, said that it would cut the amount of cash that banks must hold in reserve to boost liquidity are some of the factors that led to a rebound.

However, analysts still see the COVID new variant Omicron as an immediate threat that could lead to volatility on the D-Street. The key resistance levels on the Nifty50, which investors should watch out for on the upside is 17100-17450, while support is seen at 16800-16750.

“Going forward, investors have to be little watchful as more Omicron cases had been detected in India and the recent news flow around the variant will contribute to equity market volatility in the coming weeks,” Mohit Nigam, Head - PMS, Hem Securities, said.

“Inflation is the second risk the markets will have to deal with. Any disruption in supply chains because of Omicron may further exacerbate inflationary pressures,” he said.

India recorded 6,822 new coronavirus cases in the last 24 hours, as per the data from the Ministry of Health and Family Welfare (MoHFW). The total number of Omicron cases in the country as on Monday was 23. Full Coverage here
https://www.zeebiz.com/india/news-live-omicron-variant-cases-covid-19-ne...

The third wave of coronavirus could hit the peak by February with cases likely to be reaching up to 1-1.5 lakh a day due to Omicron, the new variant of SARS-CoV2.

The good news for investors is that we are still in a bull market and any dips should be used as a buying opportunity. The Nifty50 is down by over 8 per cent from the recent high of 18604, and the fall could extent to 15 per cent, but long-term investors have nothing to worry, suggest experts.

“We are in a classical and strong bull market where we are seeing a first meaningful correction which has completed its 10% down move however this may see a further extension to make a 15-20% down move but this correction is a great buying opportunity,” Santosh Meena, Head of Research at Swastika Investmart Ltd, said.

“This bull market is likely to continue for at least next 2-3 years, therefore, investors should start to accumulate quality stocks. Those who are already stuck at higher levels and don't have free cash should not worry about ongoing correction but they should exit stocks that have some quality concerns and move into high-quality stocks,” he said.

Technically, the Nifty50 is trading below the 100-Days Moving Average placed at 17,181, and other short-term moving averages such as 30 & 50-DMA.

“Post the recent high of 18600 in Nifty during the month of October, our markets have slipped into a corrective phase and has formed a ‘Lower Top Lower Bottom’ structure,” Ruchit Jain, Lead, Research, 5paisa.com, said.

“Although on long term charts this just seems to be a corrective phase within an uptrend, the retracements could lead to deeper price-wise correction given that the index had rallied significantly post March 2020 lows,” he said.

Jain further added that since there are no signs of completion of this corrective phase, investors should not be in a hurry to do bottom-fishing and rather have a cautious approach.

(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.)