Omicron- What as An Indian Investor You should Do?

The biggest question in every investor's mind is what to do when another New Variant of Covid is just next to the door. Equity markets are bound to react upside down and reshuffling of portfolios from certain sectors to other sectors or wait and watch mode is the most obvious reaction.  Panic reaction to the market will play a spoiled plot here. Every moment every news from every country will play its dice on market. Hence don't be so blind in your trades.  

Adopt ( WOD)- Wait, Observe and Then Decide.

Inflation will come down and health costs will go up. Those who have exhausted insurance coverage are the ones who will suffer more.  Profit booking, being in liquid, and preparing for the rainy season is a mush common habit and this should be done now.  Avoid panic selling and panic attacks of a falling market. The behavioral impact of the same is quite huge compared to the monetary loss if any.

Don’t get into the mode of buying cheap since cheap can become the cheapest in the market when these things strike. Please note for the Global economy the Christmas and New Year are festive and around this time the New Variant attack is a massive loss of business across any sector.  The profit booking and getting out form Travel and Tourism sectors, Airlines and getting into Pharma, healthcare, IT and other defensive sectors are most common. In these portfolios churning the market is bound to give a reaction.

Indian equity market correction and falling down and again rising to new highs is not a new story but the most important thing is that this is the 1^st time for those 2.40cr new Demat account holders who joined the stock market in the last 18 months. For them, it’s a new experience. This class of investors is the higher end of the risk that needs to be managed and guided.  

Even if the new Variant becomes 3^rdwave for India and 4^th wave for developed economies then wait and watch mode is the best option. Irrational behavior will create more panic and loss of opportunity.

The risk of getting under the New Variant is high for those countries where the vaccination rates have been low or where safety measures have been abolished. Any bad news of the New Variant will create more sell-off opportunities in the market and might keep the market volatile. Hence avoid Panic selling and also panic buying. The cheap might become the cheapest.

Gold prices might go up a crude will come down which will bring down the global inflation giving relief to the people. Central banks at the global stage have enough ammunition to fight any major setback from the New Variant.  Based on the evolution of the New Variant the policy actions of the central banks will be adopted which is expected to be slower on withdrawing support.

Indian market and its economy are well strongly placed and the only threat is that how the New variant makes progress in India.  We must remember that Indian banks are in a strong position, followed by healthy GST collection and with a stable government in place. We need to know how the government of India manages the situation before developing any assumptions. The market always accounts for the future based on assumptions. 

Follow your asset allocation and control your greed for selling and buying. Follow your investment objectives and risk profile. Don’t try to copy the risk profile of someone else.  Invest in quality large caps and midcaps and avoid historical short-term based “Millionaire Investment TIP Bets”.  If you have booked profit previously then you may continue the same. If you are at loss in your portfolio then stay away from selling (unless it's borrowed capital).  Invest slowly and have wait and watch mode.  Exit from sectors that are risky so that the portfolio remains balanced.  Avoid the trap of buying cheap since it might become cheapest hence wait, observe and then decide. (WOD)