India's index of industrial production rose 4.2 percent on the year in April, picking up from growth of 1.1 percent in March and well above the consensus forecast of 1.5 percent. Within the industrial sector, year-over-year growth in manufacturing output also strengthened from 0.5 percent in March to 4.9 percent in April. This is in broadly in line with PMI survey data showing conditions in India's manufacturing sector picked up in April before improving further in May.

At the Reserve Bank of India's most recent policy meeting, held last week, officials left policy rates on hold after increasing them by a cumulative 250 basis points since May 2022. Despite leaving rates on hold, officials advised they"will continue to keep a strong vigil on the evolving inflation and growth outlook". The strength in industrial production shown today will likely keep officials' focus on inflation risks.

Year-over-year industrial production growth is expected to rise to 1.5 percent in May versus 1.1 percent growth in April.

Industrial production measures the physical output of the nation's factories, mines and utilities. Data are not seasonally adjusted and the main is on the annual growth rate of total industrial production and, within that, manufacturing output. The report is usually released around six weeks after the end of the reference month.

Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that will not lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.

The index is a quantitative index with the production of the items being expressed in physical terms. The Index is compiled by taking into account the quantities of items produced during the current month, compared with the average monthly production in the base year. Selection of items is based on the total production of the items as the primary (main) product as well as secondary (by) product. Data are available monthly within six weeks of reference month.