Opening Bell - Morning Commentary

Relief Rally at the opening

DeepSeek's introduction of a free, open-source AI model has rattled the technology sector, with the Chinese company claiming capabilities comparable to ChatGPT at substantially lower development costs. The announcement triggered a massive selloff in technology stocks, particularly affecting industry leader Nvidia, which suffered an unprecedented $593 billion single-day market value loss - the largest ever recorded on Wall Street.

Indian markets are expected to show resilience at opening, having already factored in the significant declines in U.S. markets. The recovery in the Dow Jones from its initial plunge, coupled with the Reserve Bank of India's recent liquidity measures, has fostered optimism about potential rate cuts next week.

The RBI has implemented comprehensive liquidity enhancement measures, including a planned Rs 60,000 crore Open Market Operation purchase to be executed in three phases, alongside a Variable Rate Repo auction scheduled for next month. These initiatives signal the central bank's commitment to maintaining adequate liquidity, with additional measures anticipated during next week's Monetary Policy Committee meeting.

Market participants remain cautious amid the technological upheaval in artificial intelligence space, upcoming monetary policy decisions from both the RBI and Federal Reserve, and their policy guidance. This apprehension is compounded by inconsistent corporate earnings reports and uncertainty surrounding the upcoming Union Budget.

Nifty has fallen below the critical support threshold of 22,976, which now serves as resistance. Support lies between 22670 and 22800.