India Manufacturing PMI Rebounds to 55.4 in Jan; Domestic Demand Offsets Export Slump

Market snapshot: India's manufacturing sector signaled a modest recovery at the start of 2026, with the HSBC India Manufacturing PMI rising to 55.4 in January from a two-year low of 55.0 in December. While the print confirms continued expansion (18th consecutive month above 50), it missed the preliminary 'Flash' estimate of 56.8, suggesting the rebound is softer than anticipated.

Summary: January Manufacturing PMI rose to 55.4, driven by domestic orders. However, business confidence hit a 3.5-year low, and export growth remains sluggish. The print missed the bullish Flash estimate of 56.8.

Key Takeaways

• Jan PMI at 55.4, up from Dec 55.0, but below the 56.8 Flash estimate.
• Domestic demand fueled new orders; export growth remained weak due to global headwinds.
• Business confidence fell to a 3.5-year low; only 15% of firms expect output growth.
• Input costs (chemicals, metals) rose, but pricing power remains limited.

SAHI Perspective

The divergence between the Flash estimate (56.8) and the Final print (55.4) is critical. It indicates that while the recovery narrative holds, the velocity is being checked by external drag and cautious sentiment. The 3.5-year low in business confidence is a leading risk indicator—manufacturers are producing for now but are wary of the year ahead. This suggests a 'grind-up' rather than a breakout phase for industrial stocks.

Closing Insight

While the headline number is positive, the underlying sentiment data warrants caution. Investors should focus on companies with strong domestic order books rather than export-heavy plays in the near term.

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