Indian equities are anticipated to commence trading on an upbeat note on Tuesday, August 6, 2024, mirroring the recovery in Asian markets. This positive sentiment follows reassurances from U.S. Federal Reserve officials, which have helped alleviate investor concerns after a significant market decline on Monday.
The GIFT Nifty, a derivative product based on the Nifty 50 Index, stood at 24,318 points early Tuesday, indicating that the Nifty 50 is likely to open above its previous close of 24,055.6. This comes after both the Nifty 50 and S&P BSE Sensex, India's oldest stock index, experienced their most substantial single-day losses in two months on Monday.
Asian markets have shown signs of recovery, with the MSCI Asia ex-Japan index rising by 1%. This index tracks large and mid-cap representation across Asian markets, excluding Japan. In contrast, Wall Street equities recorded losses in the previous session.
Recent U.S. economic data has played a role in shaping market sentiment. Strong services sector performance has somewhat mitigated recession fears, while key Federal Reserve officials have stated that the recent weak labor market data does not necessarily indicate an impending recession.
A Balasubramanian, managing director and chief executive at Aditya Birla Sun Life Asset Management Company, one of India's largest asset management firms, offered guidance to investors:
"Long-term investors should not be deterred by such global uncertainties. Market downturns should be viewed as an opportunity and capitalising on dips can be beneficial."
Investors will be closely watching shares of Bharti Airtel, a leading Indian telecommunications company, which surpassed profit estimates for the quarter ending June 2024. Similarly, ONGC (Oil and Natural Gas Corporation), India's largest crude oil and natural gas company, may see increased interest after exceeding first-quarter 2024 profit expectations due to robust fuel demand.
Monday's trading session saw significant activity from institutional investors. Foreign Institutional Investors (FIIs) sold Indian shares worth 100.74 billion Indian rupees, while Domestic Institutional Investors (DIIs) purchased shares valued at 91.56 billion rupees, on a net basis.
As market volatility continues, investors are reminded that such fluctuations often present opportunities for those with a long-term perspective. The current market dynamics underscore the importance of staying informed and maintaining a balanced approach to investment strategies.