India's business activity ends fiscal year in strong note

India's business activity: India concluded the fiscal year on a high note, with business activity expanding at its fastest rate in eight months in March, according to a business survey. This suggests that the country is poised to maintain its position as the fastest-growing major economy.

The HSBC flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, climbed to 61.3 this month from February's final reading of 60.6, extending the streak of expanding activity to 32 months. 

The 50-mark separates expansion from contraction on a monthly basis.

Pranjul Bhandari, chief India economist at HSBC, highlighted that the robust growth was driven by the strongest manufacturing output in nearly three-and-a-half years. 

Both domestic and export orders showed improved vigour, with new orders rising at a faster pace than the previous month.

The manufacturing sector, a key driver of the economy in recent quarters, saw its index tracking factory activity rise to 59.2, the highest since February 2008. 

Demand for factory goods remained strong, with new orders expanding at the fastest pace in over three years.

While services activity remained robust, the index eased slightly to 60.3 in March. 

Overall exports expanded at the quickest pace in seven months, contributing to increased business optimism for the coming year.

Companies also ramped up hiring at the strongest pace since September. 

However, overall price pressures rose, with input costs at services firms increasing at the quickest pace in seven months. Prices charged also saw the sharpest rise since July 2017.

Although manufacturers' prices charged appreciated at the weakest pace in over a year in March, input costs rose faster compared to February, indicating the possibility of sticky inflation. 

This scenario may provide less incentive for the Reserve Bank of India to cut interest rates in the near term.

(With Reuters Inputs)