Sensex, Nifty Expected to Recover

6 Aug 2024 , 08:48 AM

Indian markets are poised for a positive opening, with Nifty futures on the GIFT Nifty trading 178 points higher at 24,321. This potential uptick comes after a significant sell-off in global equities, which triggered a near 3% decline in Indian markets on Monday.

Monday’s Market Recap

The Indian equity markets experienced a sharp decline on Monday, reflecting investor fears of an economic slowdown. The Sensex plummeted by 2,222.55 points, or 2.74%, closing at 78,759.40. Similarly, the Nifty fell by 662.10 points, or 2.68%, to settle at 24,055.60. The heightened fear was evident as the India VIX, a measure of market volatility and investor sentiment, surged by 42.2% to reach 20.37 levels.

Global Market Trends

Asia-Pacific Markets

Asian markets showed signs of recovery on Tuesday. Japan’s stocks rebounded sharply after the Nikkei 225 and the Topix indices suffered a significant drop of over 12% in the previous session. Other Asia-Pacific markets also opened higher, indicating a potential stabilization in the region.

U.S. Markets

On the other hand, U.S. markets closed with steep losses on Monday, extending the previous week’s sell-off amid growing recession fears. The decline was exacerbated by a sharp fall in Apple shares following news that a major investor had reduced its stake. The major U.S. indices recorded their largest three-day percentage declines since June 2022. Specifically:

• Dow Jones Industrial Average: Fell by 1,033.99 points, or 2.6%, to close at 38,703.27.
• S&P 500: Lost 160.23 points, or 3%, to finish at 5,186.33.
• Nasdaq Composite: Dropped 576.08 points, or 3.43%, ending at 16,200.08.

Recession Concerns

The fears of a recession have been shaking global markets, driving investors away from risky assets. This sentiment was fueled by weak economic data released last week, including a softer-than-expected U.S. payrolls report on Friday. The ongoing concerns have significantly impacted investor behavior and market dynamics.

Institutional Activity

On August 5, foreign institutional investors (FIIs) sold equities worth ₹10,078 crore, reflecting their cautious stance amid global uncertainties. Conversely, domestic institutional investors (DIIs) showed confidence by buying equities worth ₹9,155 crore, demonstrating a level of resilience in the domestic market.