India's services sector continued its recovery for the second successive month in March on the back of new work orders, following continuous decline since the November demonetisation measure, revealed key macro-economic data on Thursday.

The Nikkei India Services Purchasing Managers' Index (PMI) stood at 51.5 in March, up from 50.3 in February, and as compared to 48.7 registered in January.

An index reading of above 50 indicates an overall increase, while below 50 an overall decrease.

The PMI series of data are published by the leading global diversified provider of financial information services "IHS Markit".

"India's private sector economy stayed on an upward trajectory during March, benefiting from an upswing in demand and output. The country's rapid recovery from the demonetisation-related downturn was accompanied by job creation and softer inflationary pressures," said Pollyanna De Lima, economist at IHS Markit and author of the report.

"New business and output rose for the second straight month in March, with rates of expansion accelerating in both cases. The improvement in business conditions promoted job creation, while confidence towards the year-ahead outlook for activity was at a four-month high," she said. 

Besides, the seasonally adjusted Nikkei India Composite PMI Output Index also rose during the month in consideration to 52.3, from 50.7 in February, signalling consolidation in the first increase in private sector output last month after October.

"By historical standards, the increases in new work and activity remain relatively mild, though growth is likely to gather speed as we head into the new financial year. This is shown by firms' willingness to hire additional employees and reinforced by stronger confidence towards the 12-month outlook for output," De Lima said.

The report said, going ahead, services companies indicated that activity is expected to rise over the next 12 months.

On the prices front, though input costs for services firms rose in March, and some services companies raised their own selling prices in this period, the overall rate of charge inflation was "slight".

Meanwhile, data earlier this week showed India's manufacturing sector expanded last month due to healthy demand conditions and softer inflationary pressure.

The Nikkei India Manufacturing Purchasing Managers' Index (PMI) which is a composite indicator of manufacturing performance rose to a five-month high of 52.5 in March, from 50.7 reported for February.