How will Omicron affect the stock market?
On the COVID-19 front, things seemed to be getting better. At
least, that's what we all believed! Since the pandemic began, India has
reported the fewest single-day infection cases. On November 24, 2021, South Africa
calls the World Health Organization (WHO) helpline to report that a new strain
of the virus, Omicron, has been identified in the nation. So, what impact will
the new variation have on the stock market?
Current Scenario
The development of this new strain and its spread around the
globe has undoubtedly put a halt to the post-pandemic recovery process, causing
stock markets to become restless. Last week, the Sensex and the Nifty witnessed
two big drops as a result of these fears. Decisions made by governments to stop
the virus from spreading might stifle the global economic recovery, putting the
financial markets in jeopardy.
Situation of
Confusion
Stock market players are concerned about how this new
variation may effect corporate earnings. Stock markets have become more
volatile as a result of this. The stock markets can send investors on a
roller-coaster trip until the impact of this new variety is revealed. Whatever
the research reveals, stock market players will be on the edge of their seats
in the coming days to see what happens!
Whether to sell or to
hold?
Such situations brings up the urge to sell off equity
investments and hold cash as an investor. But the loss will be yours if the
stock market crosses all hurdles and continues to rise.
Investors might also think of pausing their ongoing SIP
instalments. However you would be forced to buy shares/MF’s at higher price.
What can we expect
next?
There can be two possibilities from here on. If the Omicron
variant is found to have only mild symptoms, it will certainly be a blessing in
disguise for the whole world. The spread and severity of this variant can be
controlled if this is the case. This will turn out to be a positive scenario
for the world.
The bad- It can set a stage for the virus to show its
potential with a third wave in India and across
several parts of the world if this variant is found to be more
transmissible and dangerous than the other variants which certainly can have an
impact on the businesses and in turn on the stock market.
Working from home and tackling business downfalls have
become a new normal for corporate India. The stock market participants would
keep a close eye on the development of grey areas on the virus front.
How to make the most
out of this situation?
Stick to your investment strategies and stay away from daily
market noises is what one can do to counter the situation.
You can buy at low, if the stock market is trending
downwards. However, your money can grow if the market tends to grow
upwards.
A great way to make the most out of this situation is to
stick to your investment plans and not get disturbed by daily market
volatilities.