India's index of industrial production rose 1.2 percent on the year in May, weakening sharply from growth of 2.7 percent in April. Within the industrial sector, manufacturing output growth slowed from 3.4 percent to 2.6 percent. Flash PMI survey data indicate that conditions in the manufacturing sector strengthened in June after moderating in May, with final June data scheduled for release in coming days.

The Reserve Bank of India cut policy rates by 50 basis points to 5.50 percent at their most recent meeting earlier this month. Officials expressed concerns about the impact of a challenging global environment and consider that it is imperative to continue to stimulate domestic private consumption and investment through policy levers to step up the growth momentum. They also noted that they will seek to strike a balance between supporting growth and containing inflation in upcoming meetings.

Weaker output growth is expected at 2.4 percent in May from a year ago versus 2.7 percent 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.