Indian Stock Market Faces Volatility Amid Global Weakness, DeepSeek AI Impact, and Fed Speculations

Gift Nifty signals a positive opening, but global concerns over China’s AI DeepSeek and Wall Street sell-offs keep markets cautious.

January 28, 2025: The Indian stock market is set to open cautiously on Tuesday, influenced by global market trends and emerging concerns over China’s AI model DeepSeek. Gift Nifty was trading around 22,923, a premium of 76 points from the Nifty futures’ previous close, hinting at a positive start for Indian indices despite global uncertainty.

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Global Market Trends

Asian markets traded lower after overnight losses in the US stock market, driven by a sell-off in technology stocks. The Nasdaq posted its biggest one-day percentage drop since December 18, with the S&P 500 also registering its steepest decline since January 10. The Dow Jones, however, bucked the trend with a 0.65% gain.

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Wall Street Fallout
US chipmakers took a massive hit following the debut of China’s cost-effective AI model, DeepSeek, which stoked fears of increased competition. Nvidia shares plummeted by 17%, erasing a record $593 billion in market value. Meanwhile, Alphabet and Microsoft shares fell 4.2% and 2.1%, respectively, while Apple gained 3.18%.

Asian Markets
Japan’s Nikkei 225 dropped 0.67%, while the Topix declined 0.36%. Key markets like Taiwan, South Korea, and China remained closed for Lunar New Year.

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Key Domestic Market Updates

Indian Benchmarks Under Pressure
On Monday, both Sensex and Nifty fell over 1%, with Sensex closing at 75,366.17, down 824 points, and Nifty dropping 263 points to 22,829.15. Experts believe global weakness, uncertainties over India’s Union Budget, and the Federal Reserve’s upcoming rate decisions will keep markets volatile.

Nvidia’s Shock Loss and AI Impact
The emergence of DeepSeek, a low-cost generative AI by China, rattled global tech stocks. Nvidia shares suffered their worst-ever single-day loss, while broader tech sell-offs added to market anxieties.

RBI Liquidity Measures
The Reserve Bank of India (RBI) announced a liquidity infusion of ₹1.5 lakh crore through a mix of measures, including ₹60,000 crore worth of government securities purchases via OMOs and a $5 billion forex swap auction. The move is seen as a precursor to a possible rate cut.

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Commodity Market Snapshot

Crude Oil Prices
Crude prices steadied after a sharp drop on Monday. Brent crude fell by 1.81% to $77.08 per barrel, while WTI crude futures eased marginally to $73.11.

Gold Prices
Gold prices remained firm after a previous session’s dip, trading at $2,742.49 per ounce in the spot market. US gold futures gained 0.3%, reaching $2,746.70.

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Expert Take
“Concerns over US Fed policies, coupled with global tech sell-offs and the Indian Budget announcement, will drive market sentiment this week,” said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services.

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Tags:
Indian stock market, Gift Nifty, Nvidia shares, DeepSeek AI, Sensex, Nifty, RBI liquidity, crude oil prices, gold rates, Federal Reserve, Union Budget 2025.