India's Forex Reserves Plunge as Services PMI Eases; Eurozone Activity Stabilises

India's Forex Reserves Plunge as Services PMI Eases; Eurozone Activity Stabilises​

Foreign Exchange Reserve Decline Hits $666.9 Billion Mark​

India's foreign exchange reserves saw a decline of $5.7 billion in the week ended June 26, according to the latest CareEdge daily bulletin. The reserve drop was attributed primarily to decreases in foreign currency assets and gold reserves. This decline occurs as market focus shifts towards domestic economic indicators and global trade health.

Services PMI Moderates but Remains in Expansion Territory​

India's Services Purchasing Managers' Index (PMI) moderated to 57.4 in June. This figure marks the lowest reading since January 2025, although it remains firmly within expansion territory. The moderation of this key domestic indicator comes amid evolving economic conditions both domestically and globally.

Government Eases Gas Supply Restrictions Post Conflict​

On a policy front, the government has made significant changes to energy allocation. It withdrew emergency natural gas supply restrictions that had been imposed during the West Asia conflict. This action restores normal gas allocation across several critical sectors. Fertiliser plants, refineries, city gas distributors, and industrial consumers are now included in the normalized distribution plan.

Global PMI Revisions Signal Stabilisation in Eurozone​

Globally, there is a clearer picture of regional economic health. The S&P Global Eurozone Composite PMI was revised higher to 50.0 for June. This uplift comes from a preliminary estimate of 49.5 and signals stabilization in the private sector after two months of contraction.

UK Economy Continues Contraction as PMI Slips Lower​

In contrast, economic activity in the United Kingdom shows signs of weakness. The UK Composite PMI slipped to 49.3 from 49.7 in May. This represents a second consecutive month of contraction for the UK economy.

Commodity Prices Ease as FAO Food Index Declines​

The commodity market saw some positive movement regarding food prices. The FAO Food Price Index eased by 0.3% month-on-month in June. This marks the second straight monthly decline, supported specifically by lower prices of cereals, dairy products, and sugar.

FPIs and Mutual Funds Continue Net Inflows​

Despite macro indicators moderating, institutional investment remains robust. Foreign portfolio investors (FPIs) recorded net purchases totaling USD 315 million on July 3. This figure included a significant investment of USD 247 million into equities. Meanwhile, mutual funds registered net investments of Rs 99,519 million in July so far. Of this total, Rs 22,158 million flowed into equities and Rs 77,361 million went into debt instruments.