SEBI’s changes mark a significant expansion of investment options for the industry. Good morning... I’m Rajesh Mascarenhas in Mumbai, where the market regulator has just widened the playing field for portfolio managers.

The Securities and Exchange Board of India will allow the nation’s $463-billion portfolio management industry to invest in overseas securities and undertake short selling in equity options for the first time. The changes mark a significant expansion of investment options for an industry that has grown rapidly in recent years as wealthy Indians increasingly seek professionally managed and customized investment products. While individuals and the broader mutual fund industry can already invest directly in foreign securities, the move gives wealthy Indians a new route into global markets.

That’s particularly significant for equity investors, given that the artificial intelligence boom has burnished the appeal of tech-heavy markets overseas. The opening comes as local stocks lag and persistent foreign outflows weigh on the rupee. Meanwhile, a global bond selloff extended into Asia on Friday as elevated oil prices stoke inflation concerns, pushing long-term Treasury yields to multi-decade highs and fueling expectations for further interest-rate hikes by the Federal Reserve.

India’s insurance-related stocks and the broader financial sector will continue to be in focus today following a selloff sparked by proposed regulatory changes that could hit earnings (more on that below). Weakness in heavyweight financial shares saw the benchmark Nifty 50 drop the most since early July on Thursday to close at its lowest since April 7. It is set to log a seventh straight week of losses, matching the longest such streak since April 2020.

Follow our coverage of the Trump-Xi Summit here. In today’s newsletter, we cover: Shares of insurers and distributors — including banks— collectively shed $14 billion in market value on Thursday, after the insurance regulator proposed caps on commissions and tighter limits on management expenses. PB Fintech’s shares crashed as much as 36%, the biggest single-day loss for any Indian stock since the pandemic, and Turtlemint shares sank 20%.

We answer three key questions. What is the regulator’s aim behind these measures? The regulator wants to restore limits on how much insurers can pay distributors for selling specific products, arguing that rising payouts are adding to costs at a time when premiums are climbing and insurance coverage remains low. Why is the market worried? If implemented, insurance fee income for banks and digital brokers could drop sharply.

Under the proposals, commissions on third-party motor policies would fall to almost zero, while first-year commissions on individual health policies would be capped at 15%. Which distributors and lenders stand to lose the most? The risks are higher for fintech platforms including PB Fintech and Turtlemint as their earnings could fall by 10%-12%, according to Jefferies. Among large private banks, Axis Bank and HDFC Bank are more exposed than ICICI Bank and Kotak Mahindra Bank, given insurance fee income’s larger contribution to revenue and profit before tax, according to Macquarie.

Analysts bullish on NSE despite muted debut NSE’s shares ended their first trading day at 1,818 rupees, nearly 2% above the IPO price, defying a broader market selloff. Analysts see room for more gains after the modest debut. They cite NSE’s market dominance and long-term growth prospects even as tighter rules weigh on derivatives trading.

NSE’s business model has enough levers to adjust to regulatory and economic changes while continuing to grow profitably, according to Emkay. The brokerage initiated coverage with a buy recommendation and a target price of 2,050 rupees. Prabhudas Lilladher sees the shares at 1,950 rupees, while Macquarie has a target of 1,965...