Investors to track industrial growth, credit expansion, forex reserves and PM Modi’s Europe visit amid global geopolitical uncertainty

Investors and analysts will closely monitor data related to core sector output, Purchasing Managers’ Index (PMI), bank credit growth, deposit trends and foreign exchange reserves to assess the strength of domestic economic momentum amid rising geopolitical uncertainty globally.

Alongside economic data, Prime Minister Narendra Modi’s Europe visit is expected to remain in focus as India continues strengthening trade, investment and strategic partnerships with European economies.

Core Sector Data to Indicate Industrial Recovery

The release of India’s core sector data on May 20 will be one of the most closely watched economic events of the week.

The data will provide fresh insights into the performance of infrastructure-linked industries after the eight core sectors contracted 0.4 per cent in March, marking the weakest reading in nearly 19 months.

The slowdown was largely driven by weakness in fertiliser, coal, crude oil and electricity production, while steel and cement sectors showed relative resilience.

Cumulative growth in the core sector during FY26 slowed to 2.6 per cent, the lowest level recorded in five years, increasing concerns about industrial momentum and investment activity.

Economists believe the April figures will help determine whether domestic infrastructure activity has started recovering despite disruptions caused by geopolitical tensions and rising global uncertainty.

PMI Numbers to Reflect Business Confidence

The HSBC Flash Purchasing Managers’ Index (PMI) data, scheduled for release on May 21, will offer a detailed view of business sentiment across manufacturing and services sectors.

India’s manufacturing PMI improved to 54.7 in April from 53.9 in March, supported by higher output, stronger new orders, improved inventory levels and increased hiring activity.

However, analysts noted that the pace of expansion remained among the slowest since 2022, suggesting that global economic uncertainty continues to affect industrial activity.

The services sector also witnessed a rebound in April after hitting a 14-month low in March. The services PMI rose to 58.8 as domestic demand and business activity improved.

Despite the recovery, export demand remained under pressure due to the ongoing West Asia crisis and disruptions in global trade flows.

Market participants will closely analyse the upcoming PMI readings for signs of sustained economic expansion and resilience in domestic demand.

Banking Sector Data to Reveal Credit Trends

Banking sector indicators scheduled for release on May 22 are also expected to attract significant market attention.

The latest Reserve Bank of India data showed that bank credit growth rose 16 per cent year-on-year in the fortnight ended April 30, compared to 15 per cent growth in the previous fortnight.

Deposit growth improved marginally to 12.3 per cent from 12.2 per cent earlier, reflecting stable liquidity conditions in the banking system.

On an absolute basis, bank credit stood at approximately ₹212.12 trillion, while deposits reached around ₹258.64 trillion as of April 30.

Economists believe strong credit growth continues to indicate healthy borrowing demand from retail consumers, businesses and infrastructure sectors despite global economic uncertainties.

The data will also provide clues about liquidity conditions and the overall strength of India’s financial system.

Forex Reserves to Signal External Stability

Foreign exchange reserves data, also due on May 22, will be closely monitored for signs of external sector strength and currency stability.

India’s forex reserves stood at $698.49 billion as of April 24 before declining to $690.69 billion by May 1. However, reserves recovered to $696.99 billion by May 8, largely supported by rising gold reserves.

Strong foreign exchange reserves are considered a major buffer against global financial volatility, capital outflows and currency fluctuations.

Analysts say the reserve position remains comfortable and continues to strengthen investor confidence in India’s macroeconomic stability.

PM Modi’s Europe Visit Keeps Trade and Investment in Focus

Apart from economic data, Prime Minister Modi’s Europe visit will remain a major focus area for markets and policymakers this week.

Modi is scheduled to visit Norway on May 18 for bilateral discussions and participation in the 3rd India-Nordic Summit in Oslo.

The summit will also include the prime ministers of Denmark, Finland, Iceland and Sweden.

Discussions are expected to focus on trade cooperation, clean energy, green technologies, digital innovation, maritime partnerships and resilient supply chains.

Following the Norway visit, Modi will travel to Italy from May 19 to 20 at the invitation of Italian Prime Minister Giorgia Meloni.

The visit is expected to strengthen India-Italy cooperation across defence, manufacturing, energy transition and industrial partnerships.

Markets to Track Global Risks and Domestic Momentum

The coming week is likely to be important for financial markets as investors evaluate both domestic economic indicators and global geopolitical developments.

Rising tensions in West Asia, fluctuations in crude oil prices and uncertainty in global financial markets continue to pose risks to economic growth and inflation.

However, strong domestic demand, resilient banking activity and stable foreign exchange reserves continue to support India’s economic outlook.

Analysts believe upcoming economic data releases will play a crucial role in shaping expectations regarding growth momentum, investment trends and future policy direction in the months ahead.