Industrial activity in the country, the data for which is yet to be released, is expected to see an uptick in January as the overall economic scenario has improved since December, says a report.

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Industrial production contracted to a four-month low of 0.4% in December, largely due to decline in production of capital goods and consumer goods.

"The decline in IIP was partly owing to base effects, but mostly by demonetisation-led production contraction, especially in automobile production," Kotak Institutional Equities said in a research note.

It further said the situation is likely to have improved since then and IIP growth should see some uptick in January.

"January is likely to have a better IIP print, especially from the consumer durables front," Suvodeep Rakshit, Economist at Kotak Institutional Equities, said.

The industrial output was 5.7% in November and did not capture the impact of demonetisation.

Meanwhile, Finance Minister Arun Jaitley had also said that the contraction in industrial production in December was due to fallout of demonetisation but expected a pick-up and greater expansion in the coming months.

"November and December (IIP figure) cannot be the representative of period of this year. This is the demonetisation period and compared to November, December was more challenging for the reason that in many areas old currency was allowed to operate. In December, it had gone away," he had said.