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* Preliminary estimates indicate that India's EAI-GVA grew 7.0% YoY in Jun'26, moderating from 7.8% in May'26, reflecting weaker agricultural activity amid a deficient monsoon, while non-farm sectors remained resilient. The moderation in headline growth was primarily driven by a sharp slowdown in agriculture (0.7% YoY in Jun’26 vs. 2.4% in May’26), although industrial activity strengthened further (9.2% YoY in Jun’26 vs. 7.7% in May’26), led by robust manufacturing and construction growth. Services activity remained healthy despite moderation from the previous month (7.4% YoY in Jun’26 vs. 9.1% in May’26). Consequently, non-farm EAI-GVA remained strong, printing a growth of 8.0% YoY in Jun'26 (vs. 8.6% in May'26). Notably, EAI-GVA averaged 7.5% YoY in 1QFY27, moderating from 8.4% YoY in 4QFY26.

* EAI-GDP growth edged up to 5.8% YoY in Jun'26 from 5.3% in May'26, supported by stronger domestic demand. Consumption growth accelerated to 10.9% YoY in Jun’26 (vs. 6.3% in May), driven by higher govt. revenue spending, robust auto sales, and healthy personal credit growth. Investment activity also strengthened, with EAI investment growth rising to 11.1% YoY in Jun’26 from 8.1% in May’26, supported by stronger govt. capex, resilient credit growth, and higher capital goods imports. On the external front, real exports accelerated by 16.2% YoY in Jun’26, but real imports grew faster at 31.8% YoY, resulting in a negative contribution from net exports to GDP growth. Overall, EAI-GDP averaged 7.3% YoY in 1QFY27, moderating from 9.4% in 4QFY26 but remaining above 6.5% in 1QFY26.

* High-frequency indicators for Jul'26 present a mixed picture. On the positive side, PV sales accelerated sharply, while CV sales remained robust, pointing to continued resilience in domestic demand. Registered motor vehicle sales also remained healthy, and foreign exchange reserves remained strong, supporting external stability. However, business sentiment softened, with both the manufacturing and services PMIs easing, although they continued to remain in the expansionary territory. Meanwhile, reservoir levels remained significantly below last year's levels, underscoring persistent weather-related risks despite the recent improvement in monsoon rainfall.

* Our EAI-GVA suggests that economic activity remained robust in 1QFY27, with EAI-GVA growth averaging 7.5% YoY. Consistent with this, we peg real GDP growth at ~7.2% YoY in 1QFY27. Reflecting the stronger-than-expected economic momentum, the RBI has also revised its 1QFY27 real GDP growth forecast upward to 7.0% in the Aug’26 policy from 6.6% in the Jun’26 policy, while also raising its FY27 growth forecast to 6.7% from 6.6%. In line with the improving domestic macroeconomic outlook, we also revise our FY27 real GDP growth forecast upward, likely within a range of 6.8-7.0%. Strong manufacturing and services activity, healthy credit growth, and sustained government infrastructure spending continue to underpin growth. However, the progress and spatial distribution of the Southwest monsoon, together with the evolution of El Niño conditions, will remain critical for agricultural output, rural demand, and food inflation, making weather-related developments the key downside risk to our FY27 growth outlook.

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