EconoTicker

India’s central bank kept policy settings unchanged, holding the policy (repo) rate at 5.25% (5.25% expected/previous). The reverse repo rate stayed at 3.35%, and the cash reserve ratio (CRR) remained at 3.00% (3.00% expected/previous). The unchanged stance signals a wait-and-see approach as policymakers balance growth momentum with inflation risks. For INR, steady rates generally keep the carry backdrop stable, while markets will watch upcoming inflation and activity data for any shift in guidance.

India’s January PMI data stayed firmly in high-growth territory but came in below expectations. The S&P Global Services PMI rose to 58.5 (vs 59.3 expected, 58.0 prior), while the Composite (Manufacturing & Services) PMI printed 58.40 (vs 59.50 expected, 57.80 prior). Both readings well above 50 signal strong expansion across the private sector, yet the forecast miss suggests momentum was a touch less explosive than markets had priced—an important nuance for INR sentiment as investors watch whether demand strength remains broad-based into Q1.

India’s S&P Global Manufacturing PMI came in at 55.4 in January (vs 56.8 expected, 55.0 prior). The reading still signals strong expansion in manufacturing (well above 50), but the downside miss versus expectations suggests momentum may be cooling slightly from what markets had priced—keeping attention on new orders, input costs, and whether demand strength is broad-based enough to sustain INR-positive growth narratives.

India’s bank loan growth eased to 13.1% y/y, down from 14.5% previously, signalling a moderation in credit expansion. Deposit growth also slowed to 10.6% y/y from 12.7%, implying funding growth is cooling alongside lending. The combination points to slightly softer banking-system momentum into early 2026, while the loan–deposit growth gap still suggests competition for deposits and funding costs remain a key watch item.

India’s federal fiscal deficit came in at 8,558.42B in December, improving from 9,766.71B previously, while the trade balance moved to 23.18B from 37.92B—a notable narrowing versus the prior month. FX reserves increased to $709.41B from $701.36B, strengthening the external buffer. Taken together, the data lean INR-supportive at the margin, with a firmer reserves position and improved flow metrics helping sentiment.

India’s industrial production (IIP) rose 7.8% y/y in December, well above 5.5% expected and faster than the 7.2% prior pace, signaling a strong year-end push in activity. The cumulative industrial production measure also strengthened to 3.9% (from 3.3%), reinforcing the broader uptrend. Manufacturing output was reported up 8.1% m/m (vs 8.5% prior), still elevated despite a slight step-down. Overall, the mix is growth-positive and may keep markets cautious on how quickly policy can turn more supportive if momentum stays this firm.

India’s M3 money supply growth slowed to 10.5% from 12.1% previously, pointing to a deceleration in broad liquidity creation. A cooler M3 trend can signal easing credit and deposit momentum over time—potentially tempering demand and inflation pressures at the margin—though the policy takeaway depends on whether the slowdown persists and how bank lending evolves.

India’s foreign exchange reserves increased to $701.36B, up from $687.19B previously. The uptick strengthens India’s external buffer and can help smooth INR volatility during periods of capital-flow pressure and global risk swings.

Market impact: Mildly INR-supportive at the margin (stronger reserve cover) and supportive for broader macro stability; near-term INR direction still hinges more on oil, U.S. rates, and portfolio flows.

India’s January PMI readings strengthened across the board. The composite PMI rose to 59.5 (from 57.8), driven by a jump in services PMI to 59.3 (from 58.0), while manufacturing PMI improved to 56.8 (from 55.0). The levels signal solid expansion momentum at the start of the year, with services continuing to lead.

Market impact: Supportive for Indian growth sentiment and equities; can be mildly INR-supportive if it reinforces the “India outperformance” narrative, though FX remains sensitive to global risk appetite and oil prices.

DK Shivakumar, Deputy Chief Minister of Karnataka (India), cancelled his planned appearance at Davos after a high‑profile meeting at home, triggering political buzz. While not directly linked to forum decisions, the withdrawal of a significant political figure highlights how national politics intersect with global agenda settings at Davos.

Market impact: Limited direct market impact, though notable for emerging market political sentiment narratives.

India is sending its largest delegation ever to the World Economic Forum this year, including top business and political leaders aiming to project the country as a major global growth engine. The delegation’s engagements focus on trade, investment, and India’s expanding role in global innovation and markets.

Market impact: Positive for India-linked equities, investment flows, and EM trade narratives; supportive for EM sentiment if the pitch yields deals or commitments.

India’s infrastructure (core sectors) output rose 3.7% y/y in December, up from 2.1% previously, pointing to improved momentum in key industrial inputs such as coal, electricity, steel, cement, and refinery products. The rebound suggests a firmer base for near-term industrial activity into early 2026.

Market impact: Mildly supportive for Indian growth sentiment and cyclicals; may be INR-supportive at the margin if it reinforces a “higher-for-longer” rates bias, though FX will remain sensitive to global dollar moves and risk appetite.