Money9 Edit | Covid 2.0: How long will the bulls stay strong?

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A record two lakh plus Covid-19 new cases every day has led to fresh restrictions and partial lockdowns being announced in several parts of the country. Reports of a shortage of vaccines, hospital beds, life-saving drugs, oxygen cylinders have further led to some uncertainty creeping back in. On the other hand, the economy is faced with rising inflation and low factory output. Yet, amid all the negativity the stock markets seem to be displaying surprising resilience.

So, what is supporting the sentiments?

While the partial lockdowns in states may indeed slow down the recovery for Covid-battered sectors and delay a full-blown economic recovery, analysts say things are unlikely to become worse or too bad, and the nation should be able to manage the situation with much ease. Experts, economists, and brokerages remain optimistic this time around.

The reason behind the bulls not giving up yet is also that the fear of the unknown has gone. The memory of bull run post the first lockdown is still afresh and there is a temptation to buy every dip.

The ongoing vaccine drive, global growth, hefty stimulus check, liquidity and robust earnings outlook are further lending support.

Global cues are supportive of the sentiments, the Dow and S&P 500 index surged to record highs as retail sales surged in March after fiscal stimulus checks were paid to Americans and jobless benefit claims fell to a fresh low for the pandemic period.

So, will the markets rise further or should one brace for any correction?

Well experts say, corrections amid the current scenario cannot be ruled out with brokerage houses trimming their Nifty return targets and the likely delayed recovery due to partial lockdowns. However, the most prudent strategy for investors in the current scenario would be to stick to their investments, accumulate quality stocks on dips, remain well-diversified, and stay invested for the long term.