India's index of industrial production rose 5.0 percent on the year in January, rebounding from growth of 3.2 percent in December and well above the consensus forecast for an increase of 3.5 percent. Within the industrial sector, manufacturing output advanced 5.5 percent on the year after an increase of 3.0 percent previously. More up-to-date PMI survey data published previously indicated that conditions in the manufacturing sector strengthened sharply in January and then moderated in February. Mining and electricity output rose 4.4 percent and 2.4 percent on the year respectively in January.

The Reserve Bank of India cut policy rates by 25 basis points to 6.25 percent at their most recent meeting held last month. Officials expect household consumption to remain robust but expressed caution about external risks to the growth outlook and noted that they forecast growth will be weaker than it was last year. Officials also decided to leave the policy stance at"neutral" for now, judging that this will provide them with flexibility in upcoming meetings.

Output slowed sharply to a 3.2 percent year on year rise in December from 5.2 percent in November, dragged down by weak manufacturing. The consensus looks for output up 3.5 percent in January.

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.