“Activity in the service sector expanded at a slightly slower clip in February, but a continued strong increase in new business and an uptick in the sentiment gauge suggests that activity will remain well-supported in the months ahead,” Leif Eskesen, chief economist for India & ASEAN at HSBC said
New Delhi: India’s services sector witnessed a modest dip in growth rate last month and also saw some job cuts for the first time in three months, reports PTI.
The HSBC Services Business Activity Index stood at 56.5 for the month of February, down from 58 in the previous month, despite an increase in new orders and uptick in business sentiments.
A score above 50 indicates growth in the sector, while a reading below 50 means the segment is contracting.
However, the HSBC survey found that a moderate rate of job cuts was indicated by manufacturers and the overall staffing levels also fell slightly.
The job cuts in February followed two consecutive months of a marginal increase in employment levels.
The HSBC India Composite Index—which covers both the manufacturing and service sectors—was at 57.8 for the month of February, down from nine-month high level of 59.6 in January.
On an optimistic note, Leif Eskesen, chief economist for India & ASEAN at HSBC said that the outlook for the sector looked “well supported”.
“Activity in the service sector expanded at a slightly slower clip in February, but a continued strong increase in new business and an uptick in the sentiment gauge suggests that activity will remain well-supported in the months ahead,” Mr Eskesen said.
According to the report, service companies in India were optimistic about rising activity over the next year, owing to higher new work intakes, alongside ongoing improvements in market conditions.
New business received by Indian service providers reported an increase during February, largely driven by new client wins.
Manufacturers reported a marginal strengthening in new order growth. The expansion of overall new work intakes accelerated slightly to reach an eleven-month high, HSBC said.
“As service sector activity is expected to stay relatively brisk and inflation is likely to hover above the comfort zone, the Reserve Bank of India (RBI) will have to approach the easing cycle cautiously. In addition, oil prices could have an impact on the timing as well as speed of rate cuts,” Mr Eskesen added.
India’s economy grew at 6.1% in the third quarter this fiscal, the slowest in over two years, prompting corporates and experts to press for faster reforms to boost industrial output.
The economy had expanded by 8.3% during the corresponding quarter a year ago.
Wheels India had earlier this fiscal entered into a technical agreement with Topy Industries
Wheels India, supplier to vehicles including cars, trucks and tractors, will invest over Rs70 crore this year on expansion.
A significant part of the investment will be for growing the exports market, the company's managing director Srivats Ram told PTI.
The company has plants at Padi and Sriperumbudur in Tamil Nadu; Pune, Rampur, Bawal and Pantnagar with overall annual capacity of 15 million wheels, he said.
While over 80% of the business comes from the domestic market, the company exports wheels for off-road construction equipments and agricultural applications to Japan, Korea, US, Brazil, Belgium, South Africa, China and Indonesia.
Wheels India had earlier this fiscal entered into a technical agreement with Topy Industries, a Japanese steel wheel manufacturer, for process, design and development of car wheels.
In the late afternoon, Wheels India was trading at around Rs599 per share on the Bombay Stock Exchange, 18.36% up from the previous close.
The orders shall be completed in 12 months
Construction company RPP Infra Projects Ltd has won new orders worth Rs30 crore in the irrigation and building sector in Tamil Nadu.
The orders include one for construction of a library building for Central Library Buildings at Thiruvarur, Tamil Nadu under the Central Public Works Department.
Other orders are for rehabilitation and modernization of supply channels in Vellore and Villupuram districts under Water Resources Department, Public Works Department Tamil Nadu. The orders shall be completed in 12 months.
In the late afternoon, RPP Infra was trading at around Rs69 per share on the Bombay Stock Exchange, 3.84% up from the previous close.