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Markets likely to make gap-down opening amid India-Pakistan tensions
May-09-2025

Indian equity markets are likely to make a gap-down opening on Friday, amid escalating tensions between India and Pakistan. India has countered the Pakistani attack on Indian cities late last night. However, downside may remain capped amid continued inflows from Foreign Institutional Investors (FIIs).

Some of the key factors to be watched:

RBI relaxes norms for FPI investments in corporate debt securities: The Reserve Bank has relaxed norms for investments by foreign portfolio investors (FPI) in corporate debt securities through the general route by withdrawing certain requirements.

India, Chile ink terms of reference for comprehensive free trade pact: India and Chile signed terms of reference (ToRs) to negotiate a comprehensive free trade agreement. The two countries implemented a preferential trade agreement (PTA) in 2006 and are now planning to widen its scope for a comprehensive economic partnership agreement (CEPA).

India to cut import duties on PLI-covered medical devices: India will reduce import duties on medical devices covered in the production-linked incentive (PLI) scheme only from the sixth year onward, under its free trade agreement with the UK.

India-UK FTA to cut auto duties over 10-15 years with industry safeguards: India has included adequate safeguards in the free trade agreement with the UK to protect its sensitive sectors and in the automobile segment, the import duty will be reduced over 10-15 years.

Insurance companies will be in focus: General Insurance Council reported that general insurance companies recorded 14% YoY growth in premiums to Rs 30,662 crore, while standalone health insurance companies posted an 11% YoY growth to Rs 2,932.8 crore.

On the global front: The US markets ended in green on Thursday after President Donald Trump unveiled the framework of the trade agreement with the U.K.  Asian markets are trading mostly in green on Friday  following the broadly positive cues from Wall Street overnight.

Back home, Indian equity benchmarks ended over a half percent lower on Thursday due to selling in Realty, Oil & Gas and Auto shares. The markets experienced a volatile session marked with a lackluster start and remained range-bound for most of the day. Finally, the BSE Sensex fell 411.97 points or 0.51% to 80,334.81, and the CNX Nifty was down by 140.60 points or 0.58% to 24,273.80.                    

Some of the important factors in trade:

FIIs stay net buyers of equities for 15th straight session: Foreign institutional investors (FIIs) stayed net buyers of Indian equities for the 15th straight session on Wednesday, as they bought stocks worth Rs 2,585.86 crore. The confidence shown by the overseas investors in Indian equities amid the escalating India-Pakistan tensions.  

Hostilities between India, Pakistan heighten risks to credit metrics of both countries: S&P Global Ratings has said that the hostilities between India and Pakistan heighten risks to the credit metrics of both countries, and any escalation in clashes would put downward pressure on sovereign credit support. 

India opens central government procurement for British companies under FTA: After the UAE, India has opened its central government procurement for British companies under the free trade agreement (FTA) announced on May 06, 2025. The British firms would be allowed to participate in the procurement of goods and services of the non-sensitive central-level entities only. 

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