Stock market prosperity amidst Covid outcry? Now what should be the investment strategy

Investors should avoid making new investments in terms of profits in the short term.

Despite the increasing cases of Covid, the excitement of the stock market has surprised everyone. Some people see it as the trust of investors on the Indian economy. While some others consider it a sign of major correction in the coming days. After climbing for 4 consecutive days, now the market has weakened about 1.5% in the last 2 sessions. After all, why is no effect of Covid on the market? According to experts, how will the market be in the coming time and what should be the right strategy in the market? Let’s know-

Recent stock market move:

The total number of Covid cases and deaths in the country is close to its peak. Despite this, the stock market has climbed in the last 2 weeks. The Nifty had gained 2.02% on a net basis in the week ending 30 April. At the same time, the NSE Nifty gained 1.31% in the trading week ended May 7. The highest-growing stocks in these two weeks had also made huge profits of around 17% and up to 14%. Many stocks are continuously making their new peak in the market. The market saw a boom of 4 days before breaking up on Tuesday 11 May. The valuation of the market has improved in the last two days.

What is the reason behind this boom?

There are some important reasons behind the market boom. The performance of most companies in the financial results for the March quarter has been encouraging. Last week, the RBI also made some important announcements to maintain liquidity in the economy. Due to the continuous progress of the process of vaccination, there are also good purchases by the investors in the market.

Apart from this, the helpful position in technical charts has helped the bulls in the market. Retail investors are supporting domestic institutional investors in purchasing. Despite worsening conditions, the lack of a nationwide lockdown also reduced the market’s economic impact.

What Correction will come in the market?

Many experts have been describing the market as overvalued since the first round of market recovery after Covid. In such a situation, despite the fierce outbreak of Covid, no change in the market indicates that these things are correct.

The stock market is completely ignoring the current situation. The recent profits in the market have come on the basis of large liquidity. If Corona cases were not normalized as expected and contrary to the assessment, the situation did not go well in May, then market correction can be expected.
— Sameer Rachch from Bloomberg, fund manager, Nippon India Mutual Fund

What strategy can be right for investors?

Despite the bullish sentiment in the market, investors should trade with caution. If the situation does not normalize soon, then a big sell by foreign investors can be seen in the coming days.

Due to the current circumstances, we see a possibility of 5-10% correction in the market. Our outlook for the market has not changed for the long term and we would recommend buying after the fall.
— Amneesh Agarwal, Head of Research, Institutional Equities from Moneycontrol

Global liquidity in the market and the ‘hope trade’ of the second wave of Corona reaching the peak in May has helped the Bulls in the market. The devastation caused by the lockdown will have a negative impact on most sectors in the coming months.
— Satchitanand Aukritar from Moneycontrol, DVP, Technical (Equity), TradeBulls Securities

Investors should avoid making new investments in terms of profits in the short term. Good current holding can be held for long-term returns. Now that the market is at a good level, investors in need of money can also consider booking profit.