India's service sector activity in May grows for first time in a year

India's service sector industries held down by a global economic slowdown saw a surge in business activity for first time in nearly a year, in May, results of a survey released on Wednesday showed.

India's manufacturing sector also grew for the seventh straight month in May, fuelled by higher domestic and export order flows, according to the survey released by global financial services major HSBC.

According to the survey, the HSBC Services Purchasing Managers` Index, compiled by Markit, rose to 50.2 in May from 48.5 in April, rising above the 50 mark for the first time, showing growth against the contraction registered since June last year.

The business optimism created by the landslide win for Narendra Modi and his Bhartiya Janata Party also showed in the new business sub-index, which rose to 50.5 in May, also the highest since last June.

The PMI data also showed input costs and prices charged by services companies rose at a slower pace last month.

Factory activity also expanded at a slightly faster pace in May, while input prices rose at their slowest rate in over a year, a similar business survey showed on Monday.

The HSBC India Manufacturing Purchasing Managers' Index (PMI), a measure of factory production, edged up marginally from 51.3 in April to 51.4 in May, pointing to a slight improvement in operating conditions of the firms surveyed.

New orders rose to a three-month high in May, helping to boost investor sentiment with the 30-share benchmark Sensex surging over 467 points to close at 24,684.85 points.

Reserve Bank of India governor Raghuram Rajan opted to keep the central bank`s key repo rate unchanged at 8 per cent on Tuesday, as expected, after a series of rate rises.