After a decent Manufacturing PMI, the PMI for Services for Jan 2014 has come in at 48.3 (after a low 46.7 in December). Remember, a PMI value below 50 is contraction and above 50 is expansion.
Unfortunately, prices continued to increase. From their press release:
“Service sector activity remains weak and broad based, although Post &
Telecommunication led the softening in January. Meanwhile inflation pressures firmed, with input prices rising at a faster pace. Despite the weak growth backdrop, the RBI has to stick to its hawkish bias to get inflation under control and through this eventually pave the way for a recovery in economic activity."
Impact: Obviously, like all irrational markets, stocks went up.
What they are telling you is loud and clear:
What is standing between India and Growth is only one thing: Inflation.