Perspective on Markets by Mr. Jaykrishna Gandhi, Emkay Global Financial Services
Below the Perspective on Markets by Mr. Jaykrishna Gandhi, Emkay Global Financial Services
‘’The world seems to be different in the last one week. DeepSeek has taken the world by storm over last couple of days – DeepSeek R1, dropped last week is already comparing with OPEN AI’s top models across math, code, and reasoning tasks and at fraction of costs!! The platform is open source, and the massive research is out there for anyone to threadbare!
The way all the semi names have given up gains and corrected, difficult to say, that we are done yet there as uncertainty would continue to prevail over what the true demand would be for the chips, fabrication plants, energy, etc. There is likely to be some commentary from the Mega Cap names later this week – Apple, MSFT, TSLA, META, ASML, etc – hopefully, some clarity may emerge on what DeepSeek would eventually mean for Big Tech.
INDIA during the week extended the sell off, with SMID indices draw down now approaching 15-18% - already the biggest drawdown since start of 2022. We would be favouring a sharp bounce here, given how oversold the momentum indicators are, but any sustained rally would require some direction from FM (Saturday Budget) and RBI (easing of lending norms, rate cut, etc).
RBI has already initiated some announcements as regards unconventional easing – need to follow up with more of such announcements and rate cut perhaps in Feb. Liquidity Deficit has ballooned to INR 3.1trn, prompting RBI to announce slew of measures like:
* OMO purchase of INR 600bn in 3 equal tranches
* 6mth tenor USD/INR buy/sell swap of $5bn on Jan 31st
* Longer tenor 56-day VRR of INR 500bn on Feb 7th to add durability to liquidity
the measures announced could improve the system liquidity deficit to INR 2.4trn by end March, with core deficit likely around INR 1.0-1.2trn, implying that more measures are likely to be announced. Our economist suggests that these are unconventional easing mechanisms, and probably precursor to a likely monetary policy easing too in Feb !!
Having lost around 3% of its value so far in the month, Nifty looks on track to end January on a negative note to mark the fourth consecutive month of correction - an exceptionally rare occurrence that hasn't been reported in the last 23 years. Fed action, slew of reforms in the budget and liquidity easing by the central bank will set the tone for the markets in the coming 2-3 months. The FII’s have been sellers almost to the tune to ~ 1 bn USD even in Jan.
Technically a push beyond 23200 will determine the future trend.’’
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