India’s HSBC Markit Purchasing Manager’s Index (PMI) grew to57.5, growing at its fastest pace in eight months in January.

The Index that is widely followed indicator of manufacturing activity in an economy, grew mainly due to increased demand from the domestic as well as foreign markets. Leif Eskesen, economist at HSBC said that the manufacturing activity in the country rebounded in January backed by higher demand and this indicates a recovery in sentiment in recent months.

Experts say that a reading above the mark of 50 indicates expansion of the industry while that below 50 shows contraction. The PMI for India came close to contraction in September when it fell to 50.4.

Meanwhile, India's factory output sub-index rose from 55.8 in December to 62.9 in January, recording its biggest ever-monthly increase. Both the output and the new orders indexes rose to their highest level since May previous year. The figures indicate a positive rebound in the sentiment.

Reserve Bank of India (RBI) governor D Subbarao has already indicated that the central bank is considering a reversal of the monetary policy as the inflation is falling and the high interest rates have affected economic growth in the country.