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Indian equity markets are expected to make a cautious start on Tuesday, driven by negative cues from global markets and escalating geopolitical tensions between India and Pakistan following the recent terror attack in Pahalgam. Additionally, investors will be closely monitoring India's final Services PMI data for April, set to be released today. However, sustained foreign fund inflows are likely to offer some support.

Some of the key factors to be watched:

Escalating tensions to weigh on Pakistan, India Faces Minimal Impact: Moody's Ratings said that escalating tensions between India and Pakistan would weigh on Pakistan's growth. However, Moody's does not expect major disruptions to India's economic activity, as it has minimal economic relations with Pakistan (less than 0.5 percent of India's total exports in 2024).

RBI may cut rates by up to 125 bps in FY26: The SBI Research report said that the Reserve Bank of India may look at cutting policy rates by up to 125 basis points in current fiscal (FY26) amid consumer price index (CPI) inflation falling to a multi-year low of 3.34 per cent and expectation of benign inflation going forward.

Share of gold in India's forex reserves doubles in four years: The Reserve Bank of India’s data reportedly showed that the share of gold held by the bank in its foreign exchange reserves has doubled in last four years.

Telecom stocks will be in focus: The Department of Telecom issued stringent security norms mandating legal interception of satellite communication services and barred companies from linking connection of users in any form with any terminal or facility located outside the country's border as well as processing of their data overseas.

On the global front: The US markets ended in red on Monday after President Donald Trump announced plans to impose a 100 percent tariff on movies produced in foreign countries.  Asian markets are trading mostly in green on Tuesday after U.S. President Donald Trump said that he had no plans to talk to his Chinese counterpart this week. 

Back home, Indian equity markets closed on a positive note on Monday, amid sustained foreign fund inflows along with optimism ahead of major Q4 results. After an optimistic start, indices managed to keep their heads above water till the end of the trading session. Finally, the BSE Sensex rose 294.85 points or 0.37% to 80,796.84, and the CNX Nifty was up by 114.45 points or 0.47% to 24,461.15.                     

Some of the important factors in trade:

Indian economy in good shape despite challenging global environment: Expressing confidence over the Indian economy’s resilience, Chief Economic Advisor (CEA) Dr V Anantha Nageswaran has said the economy is in good shape despite the challenging global environment. 

Plans to boost export of agricultural and processed food products: The commerce ministry's arm Agricultural and Processed Food Products Authority (APEDA) is mulling formulation of strategies to boost export of agricultural and processed food products from India. 

US likely to push for tariff cuts, regulatory overhauls under proposed BTA with India: Global Trade Research Initiative (GTRI) said that the US is expected to push for sweeping changes in India's policies, ranging from tariff reductions to regulatory overhauls, that could benefit American firms and exporters, under the proposed bilateral trade agreement (BTA) with India.

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