{"id":35852,"date":"2025-01-31T23:11:06","date_gmt":"2025-01-31T17:41:06","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=35852"},"modified":"2025-02-07T21:15:58","modified_gmt":"2025-02-07T15:45:58","slug":"the-weekly-wrap-wake-up-and-smell-the-coffee-2","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/the-weekly-wrap-wake-up-and-smell-the-coffee-2\/","title":{"rendered":"The Weekly Wrap | Wake Up and Smell the Coffee"},"content":{"rendered":"

In this edition, we talk about the battle between Chinese and American companies for supremacy in artificial intelligence. We also talk about the legal challenge to OpenAI in India, the RBI\u2019s liquidity-boosting measures and DLF\u2019s record-breaking real estate project.<\/span><\/i><\/p>\n

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Welcome to Kuvera\u2019s weekly digest on the most critical developments related to business, finance, and the markets.<\/span><\/i><\/p>\n

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tl;dr<\/strong>\u00a0Hear the article in brief instead?<\/p>\n

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By the time this edition of the newsletter lands in your inbox on Saturday morning you would perhaps be sipping a cup of coffee and getting ready to watch the finance minister Nirmala Sitharaman deliver yet another budget speech.<\/span><\/p>\n

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And if you find it difficult to focus on all the big budget numbers and jargons before she comes to the part that really bothers most\u2014taxes\u2014and if you begin to wonder why the cup of coffee in your hand has turned pricier or why the 100-gram pack of coffee powder has shrunk to 90-gram, we won\u2019t blame you. That\u2019s because you are right.<\/span><\/p>\n

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Global coffee prices have nearly doubled over the past year to record highs due to tight supplies from top exporters Brazil and Vietnam. And prices could climb further this year, both in India and internationally.<\/span><\/p>\n

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Coffee, however, didn\u2019t make the front-page headlines this week. Nor did the budget, by the way. And since you will read all about the budget tomorrow and the day after, let us quickly turn to what really made top news this week. <\/span><\/p>\n

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That takes us to Hangzhou, the Chinese city that the great 13<\/span>th<\/span>-century European traveler Marco Polo described as the finest and noblest in the world.<\/span><\/p>\n

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Hangzhou gained worldwide fame this week when a local startup led by entrepreneur Liang Wenfeng shook the global tech giants. DeepSeek, the startup, launched artificial intelligence models V3 and R1 that it claims are on a par with or better than top models of American companies such as Microsoft-backed OpenAI and Facebook parent Meta Platforms. <\/span><\/p>\n

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DeepSeek received a spectacular response within days. It became the top-rated free app on Apple’s App Store in the US. OpenAI CEO Sam Altman and Silicon Valley venture capitalist Marc Andreessen called DeepSeek’s R1 model \u201cimpressive\u201d. Even US President Donald Trump admitted that the release of DeepSeek should be \u201ca wakeup call\u201d for US companies.<\/span><\/p>\n

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The bigger shock was that the Chinese startup claimed it trained its DeepSeek-V3 AI model with just $6 million using Nvidia\u2019s less-advanced H800 chips. Although critics say the startup didn\u2019t disclose the total amount it invested, this is a tiny fraction of the billions and billions of dollars that American companies are pouring into AI technologies.<\/span><\/p>\n

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Microsoft, for instance, is spending $80 billion on AI this year. Meta has vowed to invest $65 billion. Trump this month announced the Stargate joint venture by Oracle, OpenAI and SoftBank that would invest $500 billion in AI.<\/span><\/p>\n

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It was OpenAI\u2019s release of ChatGPT in late 2022 that had kicked off the AI frenzy worldwide, pushing stocks of tech companies sharply higher. Nvidia\u2019s shares, for instance, doubled last year and pushed its market cap north of $3.5 trillion. Nvidia also bore the brunt of DeepSeek\u2019s emergence with its market value plunging nearly $600 billion in a single day.<\/span><\/p>\n

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DeepSeek was followed days later by Alibaba. The Chinese tech and ecommerce behemoth released a new version of its Qwen 2.5 AI model and claimed it surpassed the DeepSeek-V3, OpenAI\u2019s GPT-4o and Meta\u2019s Llama-3.1-405B AI models. TikTok owner ByteDance also released an update to its AI model and claimed it outperformed OpenAI’s o1 in some tests.<\/span><\/p>\n

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There is little doubt that American companies, led by the Magnificent Seven\u2014Microsoft, Google, Meta, Amazon, Apple, Nvidia, and Tesla\u2014will fight to retain their perceived lead in the global AI race. There is also little doubt that Chinese companies are fast catching up. And if you are wondering where is India in this race? Well, we are just waking up!<\/span><\/p>\n

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\"Start<\/a><\/b><\/p>\n

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Copy it Right<\/b><\/h3>\n

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OpenAI isn\u2019t just facing a challenge in its home turf; it is also facing the heat in India. But not from any AI rival. Instead, the ChatGPT owner is fighting a legal challenge by news agency ANI, book publishers and media organisations. <\/span><\/p>\n

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While ANI filed a copyright lawsuit against OpenAI last year, several book publishers and their international counterparts, as well as newspapers and news websites are seeking to join the court case.<\/span><\/p>\n

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The Federation of Indian Publishers, whose members include Rupa Publications, S.Chand and Co, Penguin Random House, Bloomsbury and Cambridge University Press, has filed a case against OpenAI in the Delhi High Court. Digital units of The Indian Express, Hindustan Times as well as Reliance Industries and Adani groups also intend to join the lawsuit. <\/span><\/p>\n

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These publishers and media companies argue that ChatGPT scraped content from their websites to reproduce their work and even lifted book summaries or extracts from unlicensed online copies.<\/span><\/p>\n

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To be sure, India isn\u2019t the only country where OpenAI and other AI companies are facing copyright lawsuits. But India is important for the world\u2019s biggest AI firm as it is the company\u2019s No. 2 market by number of users after the US.<\/span><\/p>\n

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OpenAI has denied the allegations of copyright infringement, saying it only uses information that\u2019s publicly available. It is also trying to block media companies and publishers from joining the lawsuit, and says Indian courts can\u2019t hear a case against the company because its servers are located in other countries.<\/span><\/p>\n

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The high court will hear the case next month, and it promises to be a high-octane battle. Stay tuned!<\/span><\/p>\n

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Cash Concerns<\/b><\/h3>\n

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Moving on from the exciting world of technology to the more mundane world of finance, the central banks of several countries were in action this week.<\/span><\/p>\n

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In India, the Reserve Bank of India rolled out several steps to inject liquidity into the banking system to ease a severe cash crunch that had pushed short-term lending rates higher.<\/span><\/p>\n

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The RBI said it will buy government bonds worth Rs 60,000 crore in three tranches, conduct a dollar-rupee buy\/sell swap auction of $5 billion on Jan. 31, and conduct a 56-day variable rate repo auction worth Rs 50,000 crore on Feb. 7.<\/span><\/p>\n

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The liquidity deficit widened to a multi-year high of Rs 3 trillion this week due to slow government spending, foreign investor outflows and the RBI\u2019s interventions in the forex market. But the three measures the RBI announced will inject almost Rs 1.5 trillion into the banking system. This will not only help banks to boost lending but also ease pressure on the rupee, which has been trending near record lows against the dollar.<\/span><\/p>\n

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Moreover, it indicates that the RBI is set to cut interest rates at its policy meeting on Feb. 7. But the RBI’s rate-setting decision became a little more complicated after the US Federal Reserve this week decided to keep its benchmark rate unchanged. <\/span><\/p>\n

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The Fed had cut rates thrice by a total one percentage points since September but Fed Chair Jerome Powell held back this time in the wake of strong GDP growth and relatively low inflation even as he awaits more clarity on President Donald Trump’s tariff policies that can stoke price pressures in the US. The Fed’s decision, meanwhile, didn’t stop the European Central Bank and the Bank of Canada from cutting rates.<\/span><\/p>\n

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It\u2019s Real, Really!<\/b><\/h3>\n

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While the banking system is dealing with a cash crunch, India\u2019s real estate sector shows no such problem. At least if DLF Ltd\u2019s latest project in Gurgaon is any indication.<\/span><\/p>\n

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India\u2019s biggest real estate developer said this week it sold 173 apartments at its The Dahlias project for an astounding total of Rs 11,816 crore. For those without calculators at their disposal, that\u2019s roughly Rs 68 crore for one apartment on average. Not all apartments carried the same price tag, of course, and two penthouses went for Rs 150 crore each.<\/span><\/p>\n

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DLF will take more than four years to build the ultra-luxury project that will have cascading lakes, indoor sports facilities, cinemas, and even on-call chefs for its ultra-elite residents.<\/span><\/p>\n

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The company is not done, though. The Dahlias will have 420 apartments, which means DLF still have 247 units to sell. The company said it will sell these units in a phased manner and expects to rake in a total of Rs 23,000 crore. That would mean Rs 93 crore on average.<\/span><\/p>\n

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At this price, frankly, you can buy an apartment anywhere in the world. Even in Dubai\u2019s Burj Khalifa, the world\u2019s tallest building.<\/span><\/p>\n

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Still, if you want an address in India\u2019s most expensive real estate project, and have some pocket change of a few hundred crores lying around, go for it.<\/span><\/p>\n

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If only the RBI could tap into this massive lake of liquidity to fill the banking bucket!<\/span><\/p>\n

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\"FD<\/a><\/p>\n

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Market Wrap<\/b><\/h3>\n

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India\u2019s benchmark stock market indices began the week with a loss after DeepSeek shocked US tech companies but then gained for the remaining four days to end the week higher. The BSE Sensex climbed 1.7% while the NSE Nifty rose 1.8% this week. However, stock markets will remain open on Saturday because of the budget.<\/span><\/p>\n

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State-run Bharat Electronics was the top gainer of the week. Bike and carmakers mostly ended higher, led by Hero MotoCorp, Mahindra & Mahindra and Bajaj Auto. Bajaj Finance was the biggest gainer among financial stocks, which benefited from the RBI\u2019s liquidity measures. IndusInd Bank, Axis Bank, SBI and ICICI Bank also closed in the green. Other gainers included Cipla, Trent, Nestle, Hindustan Unilever, and Tata Steel.<\/span><\/p>\n

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Sun Pharma was the top loser this week. IT companies Tech Mahindra, Wipro, HCL Technologies and TCS all ended in the red. Tata Motors, Adani Enterprises and Hindalco were among the other stocks that slipped this week.<\/span><\/p>\n

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Earnings Snapshot<\/b><\/h3>\n

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