India’s HSBC Composite PMI rose to 58.3 in April, up from 57 in the previous month.
The increase shows a faster expansion in combined activity across services and manufacturing during April.
This flash PMI data for April shows an acceleration in India’s economic expansion. The reading indicates broad-based growth across both manufacturing and services, suggesting strong underlying business conditions. This reinforces a bullish outlook on Indian equities for the coming weeks.
The positive sentiment is already reflected in the market, with the Nifty 50 recently crossing the 28,500 mark and foreign portfolio investors (FPIs) being net buyers of over $2 billion in Indian equities so far this month. We should expect this trend to continue as strong economic data attracts more capital. This suggests that long positions on the index are favourable.
Derivative traders should consider buying Nifty 50 futures or out-of-the-money call options for the May expiry to capitalise on this upward momentum. Selling put options or initiating bull put spreads could also be a viable strategy to collect premium, given the strong support for the market. These strategies are based on the expectation that the index will continue its upward trend or, at a minimum, not experience a significant decline.
However, we must watch inflation, as the March CPI reading came in at 4.8%, still above the Reserve Bank of India’s target. The RBI held the repo rate at 6.5% in its early April meeting, signaling that they are not yet ready to ease policy. This persistent hawkish stance could place a cap on how quickly equities can rally.
This strong reading builds on the momentum we saw through the second half of 2025, where the economy showed remarkable resilience despite global headwinds. The consistent expansion suggests that corporate earnings for the quarter just ended are likely to be robust. This provides a fundamental basis for the current market optimism.
The data also points towards a strengthening Indian Rupee, as strong growth and high interest rates attract foreign inflows. We could see the USD/INR pair test lower levels, making selling USD/INR futures a potential currency play. Meanwhile, the India VIX has fallen to near 11, indicating low expected volatility and making strategies that benefit from a stable market, such as selling strangles, more attractive.
