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* Industrial production (IIP) remains healthy despite sequential moderation: India’s IIP growth accelerated to 6.7% YoY in Jul’26 from 5.4% in Jul’25, although it moderated from 8.8% in Jun’26. The YoY improvement was led by manufacturing and electricity, while mining contracted. Manufacturing growth rose to 7.3% in Jul’26 from 5.1% in Jul’25, supported by stronger output across 15 of 23 subsectors, particularly wearing apparel, chemicals, computers & electronics, electrical equipment, machinery, motor vehicles and transport equipment. Electricity generation also accelerated sharply to 8.7% in Jul’26 from 2.4% in Jul’25, supported by hotter weather and higher manufacturing activity. Mining, however, contracted 0.9% in Jul’26 after growing 10.7% in Jul’25. Overall, the underlying momentum remains strong, with cumulative IIP growth rising to 6.3% in Apr-Jul’26 from 4.0% in Apr-Jul’25.

* Sequential moderation was broad-based, but investment momentum remained strong: The moderation from 8.8% in Jun’26 to 6.7% in Jul’26 was largely broad-based. Manufacturing growth eased to 7.3% YoY in Jul’26 from 9.5% in Jun’26, while electricity growth moderated to 8.7% from 11.3% and mining moved into contraction. Within the use-based classification, most segments also saw some sequential moderation. However, the more important signal is that capital and intermediate goods continue to show strong momentum. Capital goods growth remained in double digits at 16.1% YoY in Jul’26, taking cumulative growth to 15.4% in Apr-Jul’26, while intermediate goods grew 10.0% YoY in Jul’26. Consumer durables sector was another bright spot, growing 10.5% YoY in Jul’26 (vs. 10.3% in Jun’26), whereas consumer non-durables contracted 1.0% (5.6% YoY in Jun’26).

* Outlook: Industrial activity is likely to maintain its momentum in the near term, supported by resilient demand for consumer durables, strong capital and intermediate goods output, buoyant credit demand, and improving exports. The strength in motor vehicles, electrical equipment and machinery also points to healthy consumption and investment demand. However, the outlook for 2HFY27 is subject to downside risks from El Niño and a weaker monsoon, which could weigh on agricultural output, rural incomes and consumption. Elevated global commodity prices and supply-chain disruptions could also keep input costs and producer margins under pressure. Overall, domestic demand and investment should continue to support industrial growth, although weather and external risks warrant some caution.

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