SENSEX jumps 750 pts, NIFTY50 tests 23,000; here is why stock market is surging today

DeepSeek said it developed a free AI assistant very cheaply using lower-cost chips and less data than US rivals. According to a Reuters report, by Monday, the assistant had overtaken US rival ChatGPT in downloads from Apple's app store.

This led to a rout in tech stocks in the US market in the overnight trade with the NASDAQ COMPOSITE settling over 3% lower.

However, the benchmark indices back home were trading with over 1% gains in the afternoon deals.

At noon, the S&P BSE SENSEX was trading at 76,110.82, up 744.65 points, or 0.99%, while the NSE's NIFTY50 index was trading at 23,011.65, up 182.50 points, or 0.8%.

The biggest reason behind the sharp rally in the markets today is RBI liquidity measures.

The Reserve Bank of India on Monday said it will purchase government securities worth ₹60,000 crore in three tranches and announced several other steps to inject liquidity into the banking system.

As part of measures to manage liquidity conditions, the central bank also announced a USD/INR buy/sell swap auction of $5 billion for a tenor of six months to be held on January 31, 2025.

To inject liquidity, RBI said open market operations (OMO) purchase auctions of Government of India securities for an aggregate amount of ₹60,000 crore in three tranches of ₹20,000 crore each will be held on January 30, February 13, and February 20.

Reacting to the news, the banking and financial services stocks rallied in Tuesday's trade.

Last seen, the BSE Bankex index was trading at 55,786.86 levels, up 1,083.57 points or 1.98%. Similarly, the BSE Financial Services index was ruling at 10,835.31, up 181.01 points, or 1.70%.

Commenting on the RBI's move, Murthy Nagarajan, Head of Fixed Income, Tata Asset Management, said that the Reserve Bank of India's proposed measures to ease banking system liquidity through open market operations (OMO) in three tranches and a variable rate repo (VRR) auction in February are positive steps. However, these may not be sufficient given the current liquidity deficit of ₹3 lakh crore.

"We expect additional measures from the central bank to ensure stability in liquidity. Specifically, we anticipate a 50 basis point cut in the Cash Reserve Ratio (CRR) in the February MPC policy," Nagarajan said.

A combination of liquidity enhancement, rate cuts, and growth-supporting measures in the upcoming budget will be crucial to driving economic growth, Nagarajan further said.