Hopes of economic recovery were reinforced by a smart growth in industrial production, which accelerated 9.1 per cent in September against six per cent a year ago.

All major sectors —manufacturing, mining and electricity generation -- showed higher growth. Even consumer durables output rose, indicating robust demand for these products.

The positive data on industrial production helped trim early losses in stock markets, with the benchmark Sensex down by around 40 points now than 80 points in early trade.

Industrial output during the first half of this fiscal has grown 6.5 per cent against five per cent a year ago despite continued fall in demand overseas.

If the trend continues and is not powered just by temporary surge in demand during the festive season, economic recovery will be firm and could make up for decline in farm production and exports.

"Very good set of numbers, reflecting to some extent the ramp up in production to meet festive demand. We clearly see recovery underway and peg the IIP for the year to 8 per cent from 6.3 per cent," Yes Bank Chief Economist Shubhada Rao said.

Among the areas that were a laggard were food processing and consumer non-durables.

Manufacturing output was up 9.3 per cent in September against 6.2 per cent in the same month last year and that of mining was up by 8.6 per cent compared to 5.8 per cent. Electricity generation rose by 7.9 per cent over 4.4 per cent in the comparable period.

Consumer durables, which bore the brunt of the meltdown from October 2008 onwards, grew 22.2 per cent in September even on a high base of 14.7 per cent a year ago.

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