India’s Composite Activity Index Rises to 56.7 in October, Fastest Pace Since June
Key Facts
The HSBC Flash India composite activity index rose to 56.7 points in October from 55.9 in September, its fastest expansion since June, according to data cited by the Financial Express. The reading shows activity grew during the month, with the index accelerating from the previous month. Companies attributed the improvement to better market conditions and an increase in new orders. In contrast, input cost inflation slowed for a seventh consecutive month. These indicators come as India imports about 90% of its oil needs, making energy costs and external supplies relevant to domestic economic conditions.
By sector, the services activity index rose to 56.2 points in October from 55.2 in September, according to index data reported by the Financial Express. The comparison reflects an improvement in the pace of services activity during the month. The composite activity index also stood at 56.7 points, up from September’s reading of 55.9. Companies said market conditions had improved and new orders had increased, the two factors they linked to stronger activity. The slowdown in input cost inflation continued for a seventh month, alongside expanding activity in October.
India’s reliance on imported oil provides part of the context for market interest in energy costs and the currency. Reuters said the country imports about 90% of its oil, exposing its economy to supply disruptions and higher energy costs linked to the war. In September, India’s imports of crude from the Middle East rose to about 2.8 million barrels per day, the highest level since February, Reuters reported. Gulf oil accounted for about 54% of total imports in the same month. These figures show the prominence of Middle Eastern supplies in India’s crude import mix, while oil costs and foreign portfolio flows remain among the factors watched by currency markets.
In the rupee market, Reuters said on October 19 that the currency was likely to stabilize during a holiday-shortened week, with oil prices and foreign portfolio flows still in focus. The assessment indicates that oil and financial flows remained on traders’ radar that week. The report did not specify an actual move in the rupee or its size. The available facts also do not include figures for the cost of a barrel in rupees or fuel marketing companies’ losses cited in an earlier draft. A specific increase in crude costs or per-liter losses therefore cannot be attributed to the sources in this material.
On crude sourcing, India’s Bharat Petroleum expected its purchases of Russian oil to decline in November, Reuters reported on October 26. The company attributed the outlook to higher shipping costs and weaker commercial viability of Russian offers compared with crude from the Middle East. This follows India’s Middle Eastern imports reaching their highest level since February in September. Reuters data put those imports at an average of about 2.8 million barrels per day, while Gulf oil accounted for about 54% of total imports. The November outlook puts sourcing choices and shipping costs among the factors that will shape the company’s crude mix.
Markets are awaiting the release of India’s all-India industrial production index on October 28, according to the calendar set by the Ministry of Statistics and Programme Implementation. The release concerns the industrial production index, not an annual report, as stated incorrectly in the first draft. It follows the October flash activity readings, which showed the composite index rising to 56.7 points and services to 56.2 points. The industrial index will add a separate reading on production activity to the data available for the month. The purchasing managers’ indexes measure activity and are not a direct measure of industrial production.