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  • Why Is the Indian Stock Market Struggling?

    Why Is the Indian Stock Market Struggling?

    Indian markets are going down, and everyone’s blaming FII selling. Okay, fair. But the real question is: Who are FIIs, and why are they selling?

    Foreign Institutional Investors (FIIs) are big financial institutions from outside India that invest in Indian stocks, bonds, and other assets. Think of them as huge investors—mutual funds, pension funds, hedge funds, and insurance companies from the US, Europe, or other countries—putting money into Indian markets.

    FIIs invest where they see the potential to maximize real returns. Many retail investors, especially those using online trading platforms in India, closely follow FII activity to make informed decisions.

    Let’s Look at the Data

    The S&P 500 (which tracks the US market) has given a 14% CAGR over the past 20 years, while the Nifty 50 (tracking the Indian equity market) has delivered 16% CAGR in the same period.

    At first glance, this looks like a win for India. But before we celebrate, let’s dig deeper—because this isn’t the full picture.

    FIIs Don’t Just Sell Randomly—They Compare Returns in USD Terms

    USD terms?

    See, the world doesn’t run on Rupees alone. When we talk about buying power on a global scale, the US Dollar still reigns supreme. Over the last decade, as the Rupee weakened against the Dollar, the actual returns for FIIs in USD terms got eroded.

    Example of INR Depreciation

    • 2015: $1 ≈ ₹61.65
    • 2025: $1 ≈ ₹87.50
    • INR has weakened by ~42% in a decade!

    This impacts FIIs’ profitability, leading them to sell.

    Now, imagine this: FIIs control over 1/5th of Indian equities. When they move, the markets feel it—hard.

    Other Key Reasons Behind This Market Slump

    1.     High Valuations & Low Earnings Justification

    Stocks had soared, but earnings haven’t kept up. When fundamentals don’t align with stock prices, corrections are inevitable.

    2.     Global Economic Uncertainty

    Global issues like U.S. tariffs, geopolitical tensions, and the Federal Reserve’s uncertain interest rate policy are affecting market sentiment worldwide. If the U.S. sneezes, India catches a cold.

    3.     SEBI’s Crackdown on Derivatives Trading

    SEBI’s new rules have led to a huge drop in daily derivatives trading volumes, reducing market liquidity and raising investor concerns. Online trading platforms are also experiencing changes due to these regulatory shifts.

    4.     Sector-Specific Weaknesses

    • Auto stocks, which shined due to EV disruption, are now struggling with weak EV demand.
    • IT stocks are under pressure due to slowing global tech demand.

    5.     Smallcap & Midcap Bear Market

    The Nifty Smallcap Index is entering bear market territory. Many retail investors, drawn in by the hype, are now facing significant losses. Investors looking for stability are turning to the best stock brokerage company options to navigate the turbulence.

    6.     FII & DII Selling Pressure

    FIIs are pulling money out due to global risks, while DIIs are cautious, adding to selling pressure and market volatility.

    7.     Spike in Volatility

    The India VIX has surged, indicating rising fear and uncertainty among investors.

    Why the Panic?

    1.     Self-Fulfilling Fear

    Investors see others panicking and start selling, creating a chain reaction of further declines.

    2.     Retail Traders in Trouble

    Many retail traders, caught off guard by SEBI’s new rules, are scrambling to exit positions, adding to the uncertainty. This has put additional focus on finding the best stock brokers to provide better guidance and risk management.

    3.     Negative News Amplification

    Headlines like “Market Crash!” are amplified, fueling fear-driven sell-offs.

    4.     Global Domino Effect

    When global markets suffer, Indian investors assume the same fate is inevitable, causing broader panic.

    What Should Investors Do?

    • Don’t Panic-Sell – Stick to your long-term investment strategy. Selling in panic only locks in your losses.
    • Look for Opportunities – Corrections often create buying opportunities. Focus on fundamentally strong stocks that have been oversold.
    • Diversify – Don’t put all your eggs in one basket. Spread investments across sectors and asset classes to reduce risk.

    As investors, we’re often at the mercy of market volatility. But staying calm, maintaining a clear strategy, and avoiding impulsive reactions can help navigate these turbulent times. Choosing the best stock brokerage company and using online trading platforms can also help traders make better decisions.

    What do you think? Are you holding strong, or is your portfolio becoming a “panic room”?!

  • DeepSeek: The AI Underdog That Shook Wall Street

    DeepSeek: The AI Underdog That Shook Wall Street

    The U.S. stock market went haywire in January when tech investors woke up to a $1 trillion wipeout in a single day. That’s right—Nasdaq dropped 3.1% on January 27th, marking its worst fall since December 2024. But what caused this chaos?

    One word—DeepSeek.

    This AI disruption has rattled Wall Street, and for good reason.

    Meet DeepSeek: China’s Answer to OpenAI & Google

    DeepSeek is China’s response to AI giants like OpenAI and Google—but here’s the kicker: it rivals GPT-4 while using far less computing power. That’s a game-changer, and it’s shifting the global AI landscape faster than anyone expected.

    Founded in 2023 in Hangzhou by Liang Wenfeng, DeepSeek focuses on developing advanced large language models (LLMs). In simple terms, it looks like ChatGPT, behaves like ChatGPT—but isn’t ChatGPT at all.

    So why is everyone losing their minds now? Let’s break down the past week’s rollercoaster ride.

    Disruption Just Got Disrupted: DeepSeek R1’s Grand Entry

    DeepSeek just dropped its latest AI model—DeepSeek R1—and the impact has been seismic.

    Think of it as an AI-powered chatbot that can:

    • Write emails
    • Solve math problems
    • Translate text
    • Write code for engineers
    • Engage in human-like conversations

    Sounds familiar? It should—it’s essentially what OpenAI’s ChatGPT does. But here’s where it gets wild.

    DeepSeek’s $6 Million Trick: Doing More With Less

    In December 2024, DeepSeek published a research paper claiming that training their latest model cost just $6 million using Nvidia H800 chips.

    To put that into perspective:

    • OpenAI’s GPT-4 training cost? Over $100 million.
    • Google’s AI budgets? Billions.

    So, what’s DeepSeek’s secret sauce?

    1. Efficient Training (Less GPUs, More Brains)

    Instead of burning cash on thousands of GPUs, DeepSeek optimized its training setup, cutting costs while maintaining performance.

    1. Smart Quantization (Think of It Like AI Dieting)

    By reducing precision in computations without losing accuracy, DeepSeek’s models run faster while consuming less memory. Imagine taking shorthand notes instead of writing a full textbook—same knowledge, less effort.

    1. API That Just Works (For Developers, By Developers)

    DeepSeek’s API design mirrors OpenAI’s JSON-based endpoints, making it seamless for developers to switch from proprietary models.

    Naturally, lower costs = cheaper AI access. DeepSeek released its chatbot for free, shaking up the entire industry. The impact?

    Nvidia lost $17 billion in market capitalization as its stock plunged 17% in a day.

    DeepSeek’s Real Magic? Reinforcement Learning Done Right

    DeepSeek isn’t just building an AI that gives the right answers—it’s training AI to think smarter.

    How? By Reinventing Reinforcement Learning (RL).

    1. Reward Modeling: Instead of simply rewarding correct answers, DeepSeek ranks responses based on clarity, coherence, and reasoning depth.
    2. Proximal Policy Optimization (PPO): This prevents AI from overfitting by ensuring it doesn’t change too much at once—keeping responses balanced.
    3. Generalized Reward Policy Optimization (GRPO): This method compares multiple AI responses to the same question and picks the best one.

    By combining efficient training, clever RL techniques, and developer-friendly APIs, DeepSeek is making AI faster, cheaper, and smarter.

    Final Thoughts: DeepSeek’s Disruption Is Just Beginning

    DeepSeek is proving a bold new reality:

    • AI doesn’t have to be expensive to be powerful.
    • Open-source models can still outperform billion-dollar companies.
    • The AI war is far from over—and DeepSeek just threw a major curveball.

    With OpenAI, Google, Meta, and Anthropic scrambling to respond, one thing is clear: DeepSeek is redefining the AI game.

    The question is—who’s next in line for disruption?

    For investors looking to stay ahead in the evolving AI and IT sector, Indira Securities offers expert insights and stock recommendations.