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Teji Mandi Explains: How will Omicron affect the stock market?

04:26 PM Dec 09, 2021 | Teji Mandi

Things seemed to be recovering on the COVID-19 front. At least, we all thought so! India was reporting its lowest single-day virus cases since the pandemic began. The economy was inching up towards pre-COVID levels, and suddenly on November 24, 2021, South Africa dials the World Health Organization (WHO) helpline to report that the country has reported a new strain of the virus - Omicron. Well, how will the new variant affect the stock market? Read to know!

Current Scenario

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The emergence of this new variant and its spread across various countries in the world has surely paused the journey towards the post-pandemic recovery, which has unsettled the stock markets. Following these concerns, Sensex and the Nifty experienced two major collapses last week. Decisions taken by countries to prevent the spread of the virus can have a dent in the global economic recovery which in turn could hurt the stock markets.

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State of Confusion!

Stock market participants are finding themselves in an uncomfortable position as to how will this new variant affect corporate earnings. This has led to increased volatility in stock markets. Till the impact of this new variant is not known, the stock markets can take investors for a roller-coaster ride! Whatever may be the research findings, stock market participants will closely observe the developments in the coming days from the edge of their seats!

To Sell or Not To Sell?

As an investor, this situation increases the urge to sell off the equity investments and sit on cash. But if the stock market crosses all hurdles and continues to rise, the loss will be yours!

Another temptation might be to pause the ongoing SIP instalments. But if the markets move up, you would be forced to buy equities/mutual funds at higher prices.

What Next?

From here on, there can be two broad possibilities. It would be a blessing in disguise for the world if the Omicron variant is found to have only mild symptoms. If this is the case, then it can replace the more severe ‘Delta variant’, and the spread and severity of the disease can be controlled. This, of course, will be a positive for the world.

The bad part would be if this variant is found to be more severe and transmissible than the previous variants, it could set the stage for the virus’ third wave across India and several parts of the world, which can have a detrimental impact on business operations, and in turn, the stock markets. This may lead to FIIs and DIIs resorting to safe heaven investments and ditch equities.

Although corporate India has somewhat already adjusted to the new normal of working from home and tackling business disruptions, the developments of the grey areas on the virus front would be closely watched by everyone, especially the stock market participants. All we can do is hope for the good!

How To Make the Most of Your Money Right Now?

The best course of action that you can follow right now is to stick to your plan and invest by staying away from daily market noise. If the stock market trends downwards, you can buy at lower levels. If the stock market trends upwards, your money can grow without any hindrance.

Not getting distracted by daily market actions and sticking to your investment plan is a sure-shot way of making the most of this situation!

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