Retail inflation moved up to 5% in December as compared to 4.38% in November as food price inflation went up to 4.78% as against 3.17% on a month on month basis. 

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Industrial production grew by 3.8% in November on the back of a rebound in the capital goods sector. The street was expecting a strong pick-up in industrial activity led by capital goods and consumer durables sector.

"The November month IIP may witness a strong turnaround as manufacturing picks up pace indeed realigning with the multi-month high PMI Manufacturing. The Manufacturing is seen expanding 3.8% (YoY), Electricity Generation to grow 10.3% and another impressive 5.5% mining growth following 5.2% in Oct will guide the headline IIP growth to 4.6%," Sunidhi Institutional Research said in a note on January 12, 2015. 

It further said, "The growth in Manufacturing shall be underscored by Capital Goods Segment and Consumer Durable Goods segment where CV’s production surged  11% (month on month) Passenger and Utility Vehicles production to have jumped 18% and 10%(month on month) respectively."

The stock markets, too, preferred to adopt a cautious approach and indulged in profit-booking ahead of retail inflation and IIP data. 

The Bombay Stock Exchange's Sensex closed up 0.46%, at 27,585.27 points and the Nifty of the National Stock Exchange closed up 38.50 points, at 8323.