The Signal (weekly highlights)

1. Services PMI rises to 53.6 in March 2022

The seasonally adjusted S&P Global India Services PMI rose to 53.6 in March 2022 from 51.8 in February 2022. This is the highest rate of expansion displayed by the index since December 2021. An index reading above 50 denotes expansion and below 50 denotes contraction.

Strengthening demand conditions, particularly in the domestic market, new business wins and greater consumer footfall due to the relaxation of Covid-19 restrictions led to this upturn in the Services PMI, according to survey participants.

2. Direct tax collection touch Rs. 1.4 tn in 2021-2022

In 2021-22, the direct tax collections touched nearly Rs.14 trillion, thereby exceeding the revised estimates (RE) by Rs.1.5 trillion. With this, it also nearly hit the estimates for 2022-23.

Better-than-expected tax collections allowed the Centre to opt for additional spending last fiscal without significantly disturbing the fiscal math.

3. Manufacturing PMI declines to 54 in March 2022

The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) declined to 54 in March 2022 from 54.9 in February 2022. Although weaker than the preceding month, the PMI reading for March 2022 marked the ninth consecutive month of expansion. A PMI reading above 50 denotes expansion and below 50 denotes contraction.

New order inflows continued to increase in March 2022, according to manufacturers. But, the pace of increase in order inflows eased to a six-month low. Production volumes rose for the ninth consecutive month to cater to the rising demand. Price indices increased since February 2022, signaling mounting input cost pressures.

4. RBI Monetary Policy Meet: Status quo maintained

All rates held steady: stance maintained as accommodative while focusing on withdrawal of accommodation to ensure inflation remains within the target going forward while supporting growth.

Expectations are that the move to hold an accommodative stance while focusing on withdrawal of accommodation to ensure inflation remains with the target, indicating that there will be a case for calibrated tightening.

5. LIC IPO may be delayed to May 2022

The initial public offering (IPO) of Life Insurance Corporation (LIC) of India will be held in early May 2022 if markets remain buoyant. However, if the IPO does not take place by 12 May 2022, it will need to update the offer document with financials for 2022-23 fiscal.

he Centre is unlikely to reduce its shareholding in LIC for at least two years following the insurer’s listing as it could affect returns for investors participating in the mega IPO. The central government is also considering increasing the stake it plans to sell through the IPO from five per cent. It may decide to sell only between 5.5 and 6.5 per cent, depending on the investor’s interest.