The Consumer Price Inflation (CPI) for the month of September came in at 4.41 percent, much higher than the 3.66 percent recorded in the month of August, while index of industrial production (IIP) for August came in at 6.4 percent versus 4.2 percent seen in July. The range for the CPI was between 3.9 percent and 5 percent, while the IIP was seen at 4-6.7 percent. The hardening in CPI does not come as a surprise due to reversal of favourable base effect from September onwards.

A CNBC-TV18 poll had predicted index of industrial production (IIP) for the month of August rising to 5 percent and September Consumer Price Index (CPI) to come in at 4.49 percent.

However, what indeed came as a surprise was the food inflation, which came in at 3.88 percent versus 2.20 percent MoM.



Urban inflation stood at 3.61 percent against 2.67 percent MoM, while rural inflation came in at 5.05 percent versus 4.47 percent in August.

The government also revised the August CPI number higher to 3.74 percent from 3.66 percent earlier.



As far as industrial production goes, mining sector output rose at 3.8 percent in August versus 1.3 percent in July. Sectors such as electricity and capital goods saw output rising at 5.6 percent and 21.8 percent in the month under review against 3.5 percent and 10.6 percent in the previous month, respectively. However, output of basic goods declined at 3.4 percent versus 5.2 percent MoM. Output of consumer durables too grew at 17 percent against 11.4 percent in July.

Sajjid Chinoy of JP Morgan believes the positive IIP number signals the momentum returning to the economy . While the growth in industrial production is substantial, he says it is too little for the brokerage firm to revise its gross domestic product (GDP) or gross value added (GVA) projections just yet.

Meanwhile, commenting on the hardening CPI inflation, Siddhartha Sanyal, Chief India Economist, Barclays, says the noteworthy part of the macro number is the softening in food inflation.

"If despite the poor monsoon season, and hike in onion prices the food inflation comes in at 3.88 percent, then that's a very heartening sign," he adds.

So will the market hail the positive numbers?

Ambareesh Baliga, independent market expert, says the market will see a gap up opening on Tuesday around 8240-8250 levels.

"Given the way the market behaved today, it is important to see whether these levels can be held on Tuesday," Baliga says, adding that corporate earnings too will be key.

