Equities mood check: Peaky markets, crawling earnings

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Read this | Developed economies lead the global race to ease monetary policy, for now The uncertainty isn't limited to Asia; multiple factors are making it difficult for US equity investors to find short-term relief. “Second quarter earnings season continued to deliver mixed results, highlighted by disappointing numbers for two of the Magnificent Seven stocks, Tesla and Alphabet (the parent of Google)," said SairaMalik, chief investment officer, Nuveen. Their underwhelming performance has prompted a negative reaction on Wall Street, suggesting that the benefits from artificial intelligence (AI) may already be factored into technology stocks.

With Apple Inc., Amazon.com Inc., and Microsoft Corp. yet to report their earnings, any disappointments could lead to increased volatility on Wall Street, potentially triggering a market correction given these stocks' significant weightages in key US indices. Back home, the June quarter (Q1FY25) results from corporate India have been lacklustre so far.

The Nifty50 index companies have posted a mere 0.7% year-on-year increase in net profits, with weak volume growth and moderate margin compression, according to a Kotak Institutional Equities report dated 29 July. Despite this, the Indian equity market appears unfazed. On Monday, the S&P BSE Sensex hit a record high of 81,908.43, before giving up some of these gains on Tuesday.

The Nifty50 is now close to the psychological mark of 25,000. The Nifty Volatility Index (VIX), a fear gauge, rose only 2% over the last five trading sessions, indicating a sense of complacency. The market has cheered modest beats and dismissed large misses in earnings, Kotak said.