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.

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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.)