DeepSeek's Impact on Global Markets and Important Developments in India

The launch of DeepSeek, a Chinese AI startup led by Chief Liang Wenfeng, has resulted in a significant selloff in global tech stocks. This new company has introduced an open-source large language model that rivals products from established companies like Nvidia, OpenAI, and Meta, but it does so at a much lower cost. This development raises concerns about the technological supremacy of the US in the AI sector.

DeepSeek's AI model can operate on less advanced chips, evading US restrictions on high-end semiconductor exports to China. Its application has become immensely popular, even ranking at the top of Apple's App Store.

As a consequence of DeepSeek's rise, shares of leading US AI companies have seen a sharp decline. Nvidia, for instance, suffered its largest ever one-day market capitalization loss, plummeting by $593 billion. Other tech stocks followed suit, with the Nasdaq Composite dropping over 3% and the S&P 500 declining by 1.5%. Meanwhile, the Dow Jones Industrial Average experienced a slight increase of nearly 300 points. As investors sought safety, bond yields fell and the dollar gained value.

On a broader front, amid escalating global uncertainty following Donald Trump's recent inauguration as US President, Indian Prime Minister Narendra Modi took to social media to announce his conversation with Trump. Modi congratulated Trump on his new term and expressed a commitment to a solid partnership between India and the US.

In domestic news, the Reserve Bank of India (RBI) has implemented various measures to enhance liquidity within the banking sector. These steps include open market operations, longer-term variable rate repo auctions, and interventions in the foreign exchange market. Collectively, these measures are projected to inject approximately Rs 1.5 lakh crore into the banking system.

The RBI is set to conduct open market purchase auctions of government bonds worth Rs 60,000 crore in three separate tranches of Rs 20,000 crore each, scheduled for January 30, February 13, and February 20. Additionally, a 56-day variable rate repo auction for Rs 50,000 crore will take place on February 7. There will also be a $5 billion dollar-rupee buy-sell swap auction set for January 31. These activities are seen as potential precursors to an interest rate cut ahead of the upcoming Monetary Policy Committee meeting.

In other significant news, 360 One WAM Ltd., a wealth and asset management company, announced its intention to acquire merchant banker and mutual fund distributor Batlivala & Karani Securities India Pvt. for Rs 1,884 crore. This acquisition, which also involves a Rs 200-crore cash component, is structured as a mix of stock and cash transactions and is subject to regulatory approvals.

Stocks to keep an eye on today include Infosys, 360 One WAM, Bank of Baroda, Wipro, and Tata Power.

DeepSeek, Tech, Liquidity