Teji Mandi Explains: COVID-19 is back to spook the market

In the past six months, the market activity has cooled down significantly

Teji MandiUpdated: Tuesday, June 07, 2022, 02:09 PM IST
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The Indian stock market is tumbling again after COVID-19 resurfaced in yet another avatar.

What’s Happening?

In the past six months, the market activity has cooled down significantly. The volumes of rupee and shares traded and the number of trades executed has remained on the lower side, indicating shrinking participation in the market. Extreme volatility in the market makes it challenging for any prediction. There are many factors affecting the market apart from the obvious reasons (geopolitical tensions, inflation etc.). The biggest fear resurfacing is COVID-19.

According to the recent data shared by the Union Health Ministry on Monday, India logged over 4,500 new COVID-19 cases and nine fresh fatalities. Recently, many public personalities have tested COVID-19 positive, including Sonia Gandhi, Priyanka Gandhi, Shah Rukh Khan, Katrina Kaif etc. This is the single most scare that has the ability to push the market to its bottom. Another fear that retail investors have this week is the RBI Policy meeting. It is expected that the RBI could hike interest rates by 40-50 bps.

Should This Concern You?

COVID-19 infections are scary, but they won’t affect the market as profoundly as we saw in 2020. The chances of that happening again are less. Meanwhile, one should take this golden opportunity to diversify their portfolios and sit tight. Market corrections are a great time to invest because every sector and company take a plunge. Rather than being scared, be cautious and keep investing.

What Lies Ahead?

New evidence suggests that those who have received three doses of vaccine will not be affected in the medium-term. While we are witnessing a new upcoming wave, its chances of being worse than the Omicron virus is less. Omicron has been labelled the dominant virus we have seen so far. Markets won’t crash due to this, but there could be some tapering in the near future.

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