Opening Bell - Daily Morning Commentary

Markets recover from Deepseek Selloff

US Equity markets finished higher on Tuesday, as technology stocks rebounded from sell-off that was sparked by Chinese AI startup DeepSeek, a low-cost Chinese artificial intelligence model that could threaten the dominance of U.S. rivals. Some investors hunted for bargains after record-breaking wipeout.

The Federal Open Market Committee (FOMC) will conclude its January meeting on Wednesday, with markets forecasting Fed to slow its pace of easing, starting with a pause this month.

Microsoft and Meta are scheduled to report fourth-quarter earnings on Wednesday, with Apple and cloud-computing leader Amazon 0on deck for Thursday. Investors will be looking for perspective from management on the potential impact of DeepSeek's AI model on their businesses.

Some Asian markets are closed or have shortened trading sessions due to the Lunar New Year holiday. The U.S. dollar advanced versus major currencies. In the commodity space, WTI oil and gold traded higher.

India's benchmark Nifty index staged a welcome recovery on January 28th, rising 128 points (0.56%) to close at 22,957, primarily driven by a strong performance in banking stocks. This upward movement provided much-needed relief to investors following two consecutive sessions of market decline.

Market sentiment is currently focused on three crucial upcoming events that could significantly influence the market direction in the near term: First, all eyes are on the US Federal Reserve's monetary policy meeting conclusion tonight, which could provide important signals about the central bank's interest rate trajectory for 2025. Second, the monthly futures and options (F&O) expiry scheduled for Thursday is expected to introduce some volatility as traders adjust their positions. These expiry sessions typically witness increased trading activity and can lead to sharp market movements. Third, and perhaps most significantly for domestic investors, the presentation of India's Union Budget 2025 on Saturday is generating considerable anticipation. The convergence of these three major events within the same week has created a heightened sense of caution among investors, who are carefully positioning their portfolios in anticipation of potential market-moving developments.

Indian markets are slated to open mildly higher today, on the back of positive global cues.