Indian stock market: 6 key things that changed for market overnight - Gift Nifty, Nasdaq’s crash to recovery in Nikkei

Indian stock market: The domestic equity market indices, Sensex and Nifty 50, are expected to open higher on Tuesday after the stock market crash seen in the previous session.

Asian markets traded higher with Japan’s Nikkei recovering almost all losses from yesterday, while the US stock futures also gained. However, the US stock market ended sharply lower overnight, with the benchmark indices falling 3%.

Investors worry that the economy is losing steam more rapidly than anticipated and that the Federal Reserve erred by keeping interest rates steady at its last policy meeting, Reuters reported.

Traders are now pricing in an 86% chance the Fed will cut rates by 50 basis points at its next scheduled policy meeting in September, and a 14% chance of a 25 basis-point reduction, according to the CME Group's FedWatch Tool.

On Monday, the Indian stock market crashed with the benchmark indices falling nearly 3% each, following the global market rout after the US recession fears and rising tensions in the Middle East jolted financial markets around the world.

The Sensex crashed 2,222.55 points, or 2.74%, to close at 78,759.40, while Nifty 50 plunged 662.10 points, or 2.68%, to end at 24,055.60.

“We expect volatility to continue ahead of RBI Policy and multiple global headwinds, including the unwinding of Yen carry trades, recession fears in the US, and escalating tensions in the Middle East. India stands strong with the support of healthy macros, strong participation from domestic retail and institutional investors, and inline Q1FY25 numbers so far. The combination of ~7% GDP growth and ~15% Nifty earnings CAGR in FY24-26, stable currency, moderating inflation, and buoyant retail participation may keep sentiments strong,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Further, he believes the valuation for Nifty is comfortable near its 10-year average at 21x one-year forward P/E.

“Hence, we believe that any correction in Indian equities should be an opportunity for long-term investors to accumulate good quality stocks,” Khemka said.

Here are key global market cues for Sensex today:

Asian Markets

Asian markets traded higher on Tuesday after a crash seen in the previous session, as the Japanese stock indices rebounded and recouped most of Monday’s losses.

Japan’s Nikkei 225 jumped as much as 10.5%, a day after it plunged to a near record 12.4%, while the Topix rallied over 10%.

South Korea’s Kospi rallied over 4% while the Kosdaq surged 5.5%. Hong Kong Hang Seng index futures indicated a lower opening.

Gift Nifty Today

Gift Nifty was trading around 24,290 level, a premium of nearly 200 points from the Nifty futures’ previous close, indicating a gap-up start for the Indian stock market indices.

Wall Street

US stock market extended sell-off to end with steep losses on Monday, with all the three major indexes registering their biggest three-day percentage declines since June 2022, and the Nasdaq and S&P 500 closing at their lowest levels since early May.

The Dow Jones Industrial Average crashed 1,033.99 points, or 2.6%, to 38,703.27, while the S&P 500 tanked 160.23 points, or 3.00%, to 5,186.33. The Nasdaq Composite ended 576.08 points, or 3.43%, lower at 16,200.08.

Apple share price dropped 4.8%, while Nvidia stock price declined 6.4%, Microsoft shares fell 3.3% and Alphabet stock plunged 4.6%. Kellanova shares soared 16.2%.

However, US stock futures were trading higher on Tuesday, with the S&P 500 futures rebounding 0.9% in early trade, while Nasdaq futures rose 1.2%.

US Services PMI

US services sector activity rebounded from a four-year low in July. The Institute for Supply Management (ISM) said its non-manufacturing purchasing managers index (PMI) increased to 51.4 last month from 48.8 in June, which was the lowest level since May 2020. Economists polled by Reuters had forecast the services PMI rising to 51.0.

Oil Prices

Crude oil prices rose more than 1% on Tuesday amid concern over escalating Middle East conflict.

Brent crude futures gained 1.6% to $77.55 a barrel, while US West Texas Intermediate crude futures climbed 1.9% to $74.29.

Dollar, Treasury Yields

The dollar index, which measures the US unit versus six rivals, was flat at 102.87 in early trading after touching a seven-month low of 102.15 on Monday. The yen weakened over 1% to trade at 145.75 against the US dollar.

The yield on benchmark US 10-year notes fell 1.1 basis points to 3.785%, while the 30-year bond yield fell 3.5 basis points to 4.0763%. The 2-year note yield rose 3 basis points to 3.9017%.

(With inputs from Reuters)

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