INSUBCONTINENT EXCLUSIVE:
The central bank surprised markets and kept interest rates on hold last month.Activity in country's dominant services sector increased at
Markit Services Purchasing Managers' Index rose to 52.2 last month from a four-month low of 50.9 in September, holding above the 50-mark
that separates growth from contraction for five straight months.A sub-index tracking demand jumped to 52.4 from September's 50.1, which,
accompanied by a slower increase in both input costs and prices charged boosted overall activity and encouraged firms to accelerate hiring
at the fastest pace in six months."Cost pressures faded in October
At the same time, a robust expansion in workforces - one of the best seen for over seven-and-a-half years - added to firms' expenses," noted
Pollyanna De Lima, a principal economist at IHS Markit."The waning of cost inflation, coupled with competitive pressures, resulted in only a
marginal uptick in charges."Some firms said tougher competition was preventing them from lifting their prices.Weaker cost pressures,
alongside a decline in oil prices, may prevent inflation from shooting above the Reserve Bank of India's medium-term target of 4 per
cent.The central bank surprised markets and kept interest rates on hold last month after increases in June and August
But it did shift its bias from "neutral" to "calibrated tightening".Stronger services activity and better-than-expected growth in
manufacturing led a composite index to increase to 53.0 last month from September's 51.6, with employment rising at its quickest rate in
nearly eight-and-a-half years."A positive outlook is by no means assured, however
With business expectations about future activity dropping to the lowest for 20 months in both the manufacturing and service sectors, firms
are becoming more guarded in the face of growing uncertainties," added de Lima."The sustainability of current market conditions and
political worries both weighed on optimism and pose downside risks to growth."
