Moneycontrol Pro Panorama | Lessons from DeepSeek's wake-up call

Dear Reader,

Indian stock markets staged a recovery in Tuesday’s trade after falling sharply on Monday. The benchmark stock market indices rose despite weak global cues, helped by buying in shares of banks and financial services companies. The Reserve Bank of India’s (RBI) decision to infuse liquidity into the banking system has stoked optimism that the central bank may reduce policy rates as early as next week. “We expect the RBI to commence the rate easing cycle with a 25 basis points rate cut, reflecting the current domestic growth-inflation dynamics,” economists at Morgan Stanley Research said in a note. RBI’s monetary policy committee is scheduled to meet on February 5-7.

You can read Aparna Iyer’s analysis of the latest RBI measures here.

Stocks outside the large caps and financial services companies continue to face selling pressure, tracking the losses in the Asian and US markets. China’s ability to produce a large language model DeepSeek at a vastly lower cost upended Wall Street’s calculations on America's stranglehold over the AI ecosystem. The technology moats espoused by the US AI giants are suddenly under threat. The implications can be profound if low priced language models such as DeepSeek succeed in real world applications.

The massive investments in data centres, computing power and electricity production that are expected till now will have to be reworked then. Business enterprises, which have been slow to adopt AI, will look for cheaper options. “For most business users, having the absolute best model is less important than having one that’s reliable and good enough,” notes this Financial Times piece on how DeepSeek changes rules of AI’s game.