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Benchmarks to make gap-up opening amid easing geopolitical tensions
May-12-2025

Indian equity markets are likely to make a gap-up opening on Monday, supported by easing geopolitical tensions following the ceasefire between India and Pakistan over the weekend. However, gains may remain capped amid recent Foreign Institutional Investors (FIIs) fund outflow.

Some of the key factors to be watched:

India's forex reserves fell $2.06 billion: Reserve Bank of India (RBI) said that India's foreign exchange reserves (Forex) fell $2.06 billion to $686.06 billion in the week that ended on May 2, after extending gains for the eighth straight week.

India, EU to hold next round of FTA talks: India and the EU are set to begin the next round of FTA talks, aiming to finalize the first phase swiftly due to global trade uncertainties. Further, both parties are aiming to conclude the second phase by the end of this year.

India must ensure balanced, fair terms in trade deal with US: Think tank GTRI said that India should take cues from the US-UK trade pact and exercise caution while negotiating an agreement with America to ensure that the deal is reciprocal, balanced, and not driven solely by political considerations.

Pharma stocks will be in focus: A private report said that the Indian Pharmaceutical Market continued its upward momentum in April 2025, registering a strong 7.8 per cent year-on-year growth with total sales reaching Rs 19,711 crore.

Breweries & Distilleries companies will be in limelight: India's free trade agreement with the UK offers limited import duty benefits on beer and excludes wine, alongside dairy, apples, and other sensitive agricultural products.

On the global front: The US markets ended mostly in red on Friday amid optimism about a potential US-China trade deal ahead of Treasury Secretary Scott Bessent's talks with Chinese officials in Switzerland.  Asian markets are trading in green on Monday as investors parsed China's April trade data.

Back home, extending previous day's decline, Indian equity benchmarks tumbled over a percent on Friday as market participants indulged in reducing their positions after the army reported multiple overnight drone and munition attacks by Pakistani forces along the western border, fueling concerns of further escalation between the two nuclear-armed nations. Finally, the BSE Sensex fell 880.34 points or 1.10% to 79,454.47, and the CNX Nifty was down by 265.80 points or 1.10% to 24,008.00.   

Some of the important factors in trade:

RBI relaxes norms for investments by FPIs in corporate debt securities: The RBI has relaxed norms for investments by foreign portfolio investors (FPIs) in corporate debt securities through the general route by withdrawing certain requirements to comply with the short-term investment limit and the concentration limit.

FIIs extend buying streak to 16th session: The exchange data showed foreign institutional investors (FIIs) extended their buying spree to the 16th consecutive session, as FIIs bought domestic equities worth Rs 2,008 crore in trade on May 8, 2025. 

Govt expands credit guarantee scheme for startups: With an aim to address the financing needs of innovation-driven startups, the DPIIT, Ministry of Commerce and Industry has expanded the Credit Guarantee Scheme for Startups (CGSS) which increases the ceiling on guarantee cover per borrower under the Scheme from Rs 10 crore to Rs 20 crore. 

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