Growth among India's services firms picked up pace in January as burgeoning order books boosted confidence, suggesting further expansion this month, a business survey showed on Wednesday.
The HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, rose to 52.4 in January from 51.1 in December. It has been above 50 level, which denotes growth, since May 2014.
The new business sub-index - which measures demand - climbed to 52.1 from 51.8. The survey also showed firms' confidence regarding future business grew at the fastest pace since June last year.
"The January Services PMI was marked by faster expansions in activity and new orders," said Pranjul Bhandari, chief India economist at HSBC. "Business sentiment led by anticipated improvements in demand and new commercial initiatives, rose to a seven-month high."
The Reserve Bank of India held interest rates steady on Tuesday, while boosting banks' liquidity in a bid to persuade them to lower lending rates after they failed to pass on the benefits of the last official rate cut three weeks ago.
The central bank's surprise quarter-point cut in January was a clear sign inflation was easing.
But the services PMI data showed input costs rose at a faster rate in January and that firms were able to pass on a slightly bigger portion to customers by raising prices.