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Export-Focused Industries Are Likely To Improve As Global Economy Recovers

The latest Composite PMI reading for India is 61.5, indicating a very strong expansion.

The Global Manufacturing PMI, which is an index of manufacturing activity in major countries around the world, has once again entered positive territory.

The Purchasing Managers’ Index (PMI) measures the direction of economic trends in manufacturing. It is based on a monthly survey of supply chain managers across 19 industries, covering both upstream and downstream activity.

After the elections in India, it is expected that the domestic economy might cool down slightly once the election-related spending decreases. However, export-oriented industries may see growth as the global economy improves.

Looking ahead, the world economy is currently experiencing an upswing this year, driven by increased global liquidity and a rise in manufacturing activity across major economies after a two-year slowdown.

Manufacturing and economic activity are picking up worldwide, with China and developed economies such as the US, Europe, and Australia observing an increase in their manufacturing PMIs after a slowdown in the past year.

The latest release in April showed that the Global Manufacturing PMI has once again entered positive territory with a reading of 50.4, indicating growth.

The MSCI World Index EPS (12 months forward EPS) and the Manufacturing PMI show a strong positive correlation. Therefore, an upturn in the global manufacturing cycle is expected to lead to improved earnings worldwide and have a positive impact on equity markets.

According to the Global Wave, an index developed by BoA Global Research, equities and cyclical assets are projected to perform well in the coming months. It is anticipated that global equity markets will remain strong in the current year.

A close examination of the relationship between global liquidity and global wealth reveals that global wealth closely follows global liquidity. This suggests that global equity markets are likely to rise in 2024, despite short-term challenges due to geopolitical tensions in the Middle East.

In terms of the Indian economy, an analysis of the Composite PMI of major economies since January 2024 shows that India is the fastest-growing among them. The latest Composite PMI reading for India is 61.5, indicating a very strong expansion.

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