This is the 22nd consecutive month that the manufacturing PMI has remained above the 50-point mark.
A reading above 50 indicates expansion while a one below this level means contraction.
Service providers' confidence with regard to the 12-month outlook for business activity remained positive.
Firms hired additional hands to keep up with the production demand
The services sector had slipped into contraction in July as confusion caused by the GST rollout triggered a dip in new business orders.
On the price front, Indian manufacturing companies continued to face higher input costs during August.
This is the 14th consecutive month that the manufacturing PMI remained above the 50-point mark. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.
The Nikkei India Services Purchasing Managers' Index, which tracks services sector companies on a monthly basis, stood at 52 in September, down from August's 43-month high of 54.7, pointing to a slower and moderate rate of expansion.
With factory production, activities across the private sector saw the biggest drop in over three years
The Nikkei India Services Purchasing Managers' Index, which tracks the services sector firms on a monthly basis, stood at 50.3 in February, up from 48.7 registered in January.
This is the ninth consecutive month that the manufacturing PMI remained above the 50-point-mark.
Currency scarcity weighed on manufacturing performance where growth of new work flows slowed
A reading below 50 means contraction in the sector.
A reading above 50 indicates expansion, while a score below this mark means contraction
Manufacturing production growth eased in May, which combined with the slowdown in services resulted in a weaker increase in private sector output, the survey said.
A reading above 50 means the sector is expanding, while a reading below 50 means contraction.
The Nikkei India Manufacturing Purchasing Managers' Index (PMI) stood at 47.9 in July, down from 50.9 in June, its lowest mark since February 2009, and highlighted the first deterioration in business conditions in 2017 so far.
The breadth, indicating strength of the market was strong
On the other hand, jobs increased for the 10th straight month in the manufacturing sector, albeit only slightly
Top losers are Sun Pharma, Bajaj Auto, L&T, ITC, Hero Moto.
The market breadth in BSE remains positive with 1,554 shares advancing and 1,196 shares declining.
The Nikkei India Manufacturing PMI dipped from 50.3 in November to 49.1 in December.
Inflation in India probably edged up in October as food prices climbed while weak demand is expected to have hurt factory output growth.
The index went below the crucial 50 mark.
The mismatch between PMI and core sector could also be due to the fact that while core sector is calculated year-on-year, PMI is calculated month-on-month.
BSE Bankex and Telecom indices led the fall.
Markets shrugged off RBI's neutral stance on key policy rates.
The 30-share Sensex ended down 30.30 points at 28,161.72 and the 50-share Nifty dipped 7.95 points at 8,543.
However, IT stocks fell on weak growth forecast by Gartner
Growth concerns on China, which has already seen the yuan getting devalued twice in August, have rattled global financial markets, including that of India.
The Sensex ended below 28,000 for the second straight day at 27,869.
Markets in green tracking firm global cues.
Sectors such as Auto, Banks, Capital Goods, FMCG, Metal, Oil & Gas and Power are trading marginally lower.
The 30-share Sensex ended higher by 46 points at 26,360 and the 50-share Nifty gained 16 points at 7,891.
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