Yes the steel wire armouring should be terminated through a gland at one or both ends depending on the the earthing arrangements.
What is the job you are looking at?
A hole saw and drill is the easiest and neatest way. However there maybe joists, cables or pipework above the ceiling to avoid.
Also have you considered the possible need for fire hoods or fire rated downlight fittings?
As this work is in a kitchen it may well be notifiable to your local LABC