Domestic markets are expected to open on a positive note after a sharp fall on Monday, as global markets rebounded. Though Indian stocks did not witness such a nosedive like Japan’s Nikkei, Nasdaq, or other markets in the Asia Pacific region, such as Korea and Taiwan, the sentiment has turned cautious, said analysts. According to them, small-cap and mid-cap stocks may remain under pressure while large-caps will remain relatively stable.
Gift Nifty at 24,288 indicates a gap-up opening of about 200 points, indicating strong buying emerging at lower levels.
According to analysts, Indian markets are relatively better placed in terms of macros and will partially be insulated from global sell-offs. They advise investors to accumulate quality stocks if the markets correct sharply.
Meanwhile, Japan’s Nikkei, which plunged 12.40 per cent on Monday, the second-worst fall since the Great Depression of 1937, recovered sharply on Tuesday. In early trading, the Nikkei rebounded nearly 10 per cent; Korea’s Kospi and Taiwan’s Index, which also experienced sharp declines on Monday, regained in cautious trading.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said: India stands strong with the support of Healthy macros, strong participation from domestic retail and institutional investors, and inline Q1-FY25 numbers so far. “The combination of about 7 per cent GDP growth and about 15 per cent Nifty earnings CAGR in FY24-26, stable currency, moderating inflation, and buoyant retail participation may keep sentiments strong. Further, 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.,” he added.
However, analysts advise investors to remain cautious and track global events, too.
Dhiraj Relli, MD & CEO at HDFC Securities, said: Indian markets have not seen a decent correction since the lows of June 2022/March 2023. While the macro numbers seem to be okay until now, the early Q1 results are a mixed bag, with companies struggling to grow topline and/or maintain margins. Rural resurgence is awaited. Lenders are seeing pressure on asset quality after a gap of a few quarters, he further said.
“Though India is relatively insulated from the world, it could still get impacted if the global risk appetite is negatively impacted affecting the FPI flows and India’s exports could get hurt. The outcome of the US presidential elections (Nov 2024) and India state elections (Oct 2024) are some other triggers to watch out for,” he said, adding that global sentiments need to stabilise for Nifty to start recovering.
“All cyclical and even IT stocks came under selling pressure on fears of global slowdown. Traders can start bottom fishing for small upsides (with stop losses in place) while investors may wait for some stability. Risk averse investors may look to take profits partly and lighten their equity portfolio. They could sit on cash for some time and then look to deploy it after a reasonable price and/or time correction, “he further cautioned.