The HSBC Services PMI for India in December 2025 stands at 59.50, indicating robust expansion in the services sector. This figure is above the 12-month average of 61.00 but shows a slight rebound from the recent dip in October and November. The services sector remains a key driver of India’s GDP, contributing over 54% to the economy. The PMI’s sustained strength reflects resilient domestic demand despite global uncertainties.

Drivers this month

• Strong new business inflows, particularly in IT and financial services.
• Improved client confidence supporting higher output.
• Moderate input cost pressures easing inflationary concerns.

Policy pulse

The PMI reading sits comfortably above the neutral 50 mark, aligning with the Reserve Bank of India’s (RBI) inflation target range of 4% ± 2%. This suggests that monetary policy remains accommodative enough to support growth without stoking overheating risks.

Market lens

Immediate reaction: The Indian rupee (INRUSD) strengthened by 0.30% within the first hour post-release, while the 2-year government bond yield edged up 5 basis points, reflecting optimism about sustained economic momentum.

The services PMI is a leading indicator of economic health, closely correlated with GDP growth, employment, and inflation trends. India’s GDP growth for Q3 2025 was reported at 6.70% YoY, supported by a strong services sector. Inflation remains contained at 5.10% YoY, aided by stable commodity prices and a benign monsoon season.

Monetary Policy & Financial Conditions

The RBI has maintained its policy repo rate at 6.50% since September 2025, balancing growth and inflation risks. Financial conditions remain moderately loose, with credit growth at 14.20% YoY, supporting business expansion in services.

Fiscal Policy & Government Budget

The government’s fiscal deficit target of 5.90% of GDP for FY2025 remains on track, with increased spending on infrastructure and digital services. This fiscal stance underpins demand in the services sector, especially in IT-enabled services and telecommunications.

Drivers this month

• New business growth accelerated to 61.20, up from 60.00 last month.
• Employment index rose modestly to 55.00, indicating cautious hiring.
• Input price pressures eased to 54.30 from 56.10, reducing cost burdens.

Policy pulse

The PMI’s resilience supports the RBI’s current stance of a steady policy rate, with inflation expectations anchored near 5%. The moderation in input costs may reduce pressure for further tightening.

Market lens

Immediate reaction: The Nifty 50 index gained 0.70% in the hours following the PMI release, reflecting investor confidence in the services sector’s growth trajectory.

Looking ahead, the services sector is poised for steady expansion, supported by digital transformation, rising consumer spending, and government initiatives like Digital India. However, external risks such as global trade tensions and commodity price volatility could temper growth.

Bullish scenario (30% probability)

• Services PMI rises above 62 by Q1 2026.
• Strong export demand and domestic consumption drive growth above 7%.
• Inflation remains within target, allowing RBI to maintain accommodative policy.

Base scenario (50% probability)

• PMI hovers around 59–60, reflecting steady but moderate expansion.
• GDP growth stabilizes near 6.50%, with inflation close to 5%.
• Monetary policy remains unchanged, balancing growth and inflation risks.

Bearish scenario (20% probability)

• PMI slips below 57 due to external shocks or domestic demand slowdown.
• GDP growth slows to below 6%, with inflationary pressures rising.
• RBI may consider tightening to contain inflation, risking growth moderation.

The December 2025 HSBC Services PMI reading of 59.50 confirms the resilience of India’s services sector amid a complex macro backdrop. While growth momentum has moderated from mid-year peaks, the sector remains a key engine for economic expansion. Policymakers should monitor inflation and external risks closely but can take comfort in the sector’s underlying strength.

Investors and market participants should watch for signals from upcoming PMI releases and related macro data to gauge the sustainability of this growth phase. The balance of risks suggests a cautiously optimistic outlook for India’s services-driven economy in early 2026.

Key Markets Likely to React to HSBC Services PMI

The HSBC Services PMI is a bellwether for India’s economic health, influencing equity, currency, and fixed income markets. Key symbols historically tracking this indicator include:

• NIFTY50 – India’s benchmark equity index, sensitive to economic growth signals.
• INRUSD – Indian rupee vs. US dollar, reflecting capital flows and economic sentiment.
• HDFCBANK – Leading private sector bank, benefiting from credit growth tied to services expansion.
• BTCUSD – Bitcoin, often a risk sentiment proxy, reacts to macroeconomic shifts globally.
• EURUSD – Euro-dollar pair, impacted indirectly by India’s trade and capital flow dynamics.

Insight: HSBC Services PMI vs. NIFTY50 Since 2020

Since 2020, the HSBC Services PMI and the NIFTY50 index have shown a strong positive correlation (r=0.68). Periods of PMI expansion above 55 have coincided with upward trends in NIFTY50, reflecting investor confidence in India’s growth story. Notably, the PMI peak of 65.60 in August 2025 aligned with a 12% rally in NIFTY50 over three months. This relationship underscores the PMI’s value as a leading market indicator.

FAQs

What is the HSBC Services PMI for India?

The HSBC Services PMI is a monthly survey-based indicator measuring the health of India’s services sector, with readings above 50 signaling expansion.

How does the Services PMI affect India’s economy?

The PMI reflects business activity, new orders, and employment trends, serving as a leading gauge for GDP growth and inflation pressures.

Why is the Services PMI important for investors?

Investors use the PMI to anticipate economic cycles, influencing equity, currency, and bond markets tied to India’s economic outlook.

Takeaway: India’s services sector remains robust, with the December 2025 HSBC Services PMI signaling steady growth and underpinning a cautiously optimistic macro outlook for early 2026.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.