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Indian equity markets are likely to make a negative start on Wednesday, amid rising tensions between India and Pakistan after India's Armed Forces conducted Operation Sindoor, targeting terrorist infrastructure in Pakistan, and mixed global market cues. However, downside may remain capped amid continued inflows from Foreign Institutional Investors (FIIs) and investors' focus on the upcoming U.S. Federal Reserve policy decision. 

Some of the key factors to be watched:

India and the UK clinches a landmark trade deal: India and the UK have finalized a landmark trade agreement aimed at doubling trade to $120 billion by 2030. The deal eliminates tariffs on a significant number of Indian goods entering the UK, including labour-intensive products, while reducing tariffs on UK’s exports like whisky and cars to India.

Bilateral trade talks between India and US moving progressively: Piyush Goyal, the Union Commerce and Industry Minister, said that the Bilateral Trade Agreement (BTA) with the United States is moving progressively in the right direction.

India has agreed to drop its high tariffs to nothing: President Trump announced that India has agreed to eliminate its high tariffs, a move he attributes to his negotiation skills. He emphasized that India would not have made such an agreement with anyone else.

Piyush Goyal says India to impose retaliatory duties on EU: Commerce and Industry Minister Piyush Goyal said that India will impose retaliatory duties if the European Union goes ahead with its plan to levy a carbon tax on Indian products.

China imposes anti-dumping duties on cypermethrin imports from India: China has imposed anti-dumping duties on cypermethrin imports from India, effective from Wednesday. This decision follows an investigation by Chinese authorities, which concluded that Indian cypermethrin was being dumped and causing significant harm to China's domestic industry.

On the global front: The US markets ended in red on Tuesday amid ongoing trade uncertainty continues to weigh on markets.  Asian markets are trading mixed on Wednesday after China's service sector grew at the slowest pace in seven months in April as disruptions to goods trade amid fresh tariffs negatively impacted new work of some service providers. 

Back home, A positive services PMI data failed to cheer the sentiments over the Dalal Street, with both Sensex and Nifty closing lower. After a slightly positive start, indices turned red and remained lackluster till the end, impacted with ongoing geopolitical tensions and all eyes on the US Fed’s interest rate decision due on Wednesday. Finally, the BSE Sensex fell 155.77 points or 0.19% to 80641.07, and the CNX Nifty was down by 81.55 points or 0.33% to 24379.60.                     

Some of the important factors in trade:

Moody's cuts India's GDP projection: Moody's Ratings in its Global Macro Outlook 2025-26 (May update) has cut India's Gross Domestic Product (GDP) growth projection to 6.3 per cent for 2025 calendar year, from 6.5 per cent, and said that economies globally will see a slowdown on account of heightened US policy uncertainty and trade restrictions.

Hopes for cut in key interest rate by RBI: A SBI Research report titled 'Inflation and Rate Cut Trajectory' has said that the Reserve Bank of India (RBI) may cumulatively cut the key interest rate in the range of 125-150 basis points (bps) this fiscal (FY26) amid benign inflationary patterns. It suggested that the central bank should go for ‘jumbo’ rate cuts of 50 bps as it would be more effective. 

India’s services sector regains momentum: India’s services sector regained momentum in the month of April, driven by a quicker increase in new order inflows, which also underpinned a faster expansion in employment. According to the survey report, the seasonally adjusted HSBC India Services PMI Business Activity Index jumped to 58.7 in April from 58.5 in March. 

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