India PMI Review- Growth slows but remains stead
2min read The HSBC Flash India PMI for September 2024 indicates continued strong growth across the Indian private sector, though at a slightly slower pace compared to previous months. The Composite PMI Output Index, which measures combined output from the manufacturing and services sectors, dropped to 59.3 from 60.7 in August. This marks the slowest growth rate in 2024 so far, although it remains well above the long-term average, indicating robust business activity.
In the manufacturing sector, the PMI fell to 56.7 from 57.5 in August, signaling a marked but slower improvement in business conditions. This slowdown reflects softer expansions in output and new orders, though the sector continues to experience strong overall growth. The Manufacturing Output Index also dipped slightly to 60.0 from 60.3 in the previous month, showing a moderation in the rate of production growth.
The services sector also saw a slowdown, with the Services PMI Business Activity Index declining to 58.9 from 60.9 in August. Despite the deceleration, the services sector continues to grow at a solid pace, supported by a strong increase in new orders. The pace of job creation in the services sector accelerated, with employment growth reaching its highest level since August 2022, as companies responded to robust demand.
Notable trends in September include a marginal increase in input cost inflation, though the rate of price increases remains relatively muted. Both manufacturing and services sectors reported slightly faster rises in input costs, driven by higher prices for raw materials and electricity. However, output price inflation slowed, particularly in the manufacturing sector, suggesting that firms are facing pressure on their profit margins.
Despite the softer growth in output and new orders, business confidence in India remains strong. Firms are optimistic about securing new business in the coming year, with sentiment improving compared to August and remaining above the long-term average. This optimism is supported by expectations of continued robust demand and output growth.
Overall, the latest PMI data indicates that while growth in India’s private sector has slowed slightly, it remains strong, with solid expansions in both manufacturing and services. Inflationary pressures are present but subdued, and business sentiment remains positive, suggesting that the Indian economy is well-positioned for continued growth despite the slight deceleration in September.
Here is a list of ETFs with exposure to India:
1. iShares MSCI India ETF (INDA)
- This ETF seeks to track the investment results of an index composed of Indian equities.
2. WisdomTree India Earnings Fund (EPI)
- This ETF focuses on Indian companies that are profitable and aims to track the performance of earnings-generating companies in India.
3. iShares India 50 ETF (INDY)
- This ETF tracks the performance of the top 50 companies in India, providing exposure to large-cap Indian stocks.
4. Invesco India ETF (PIN)
- This ETF invests in Indian stocks and aims to replicate the performance of the Indus India Index.
5. First Trust India NIFTY 50 Equal Weight ETF (NFTY)
- This ETF tracks the performance of the NIFTY 50 Equal Weight Index, providing exposure to the Indian equity market.
6. Columbia India Consumer ETF (INCO)
- This ETF focuses on the Indian consumer sector, investing in companies that are expected to benefit from the growth in India's consumer spending.
7. iShares MSCI India Small-Cap ETF (SMIN)
- This ETF targets small-cap companies in India, offering exposure to the more volatile and potentially higher-growth segment of the Indian market.
8. VanEck Vectors India Small-Cap Index ETF (SCIF)
- Similar to SMIN, this ETF focuses on small-cap Indian companies, providing exposure to the smaller, growth-oriented sectors of the Indian economy.
These ETFs offer a variety of ways to gain exposure to India's economy, ranging from large-cap blue-chip companies to small-cap growth stocks, as well as specific sectors such as consumer goods.