India Economics: India Trendspotting: Buoyancy Intact

Research evidence excerpt

M

Idea

August 5, 2026 11:00 PM GMT

India Economics | Asia Pacific

Morgan Stanley India Company Private Limited

Upasana Chachra

Chief India Economist

India Trendspotting: Buoyancy

Intact

Bani Gambhir

Economist

Shreya Singh

Economist

High-frequency data remained resilient in July. We expect both

domestic and external demand to hold up and broaden the

growth impulse. We closely track monsoon and sowing progress

to assess the impact on agri output and food inflation

(1) Consumption: Vehicle registrations (proxy for retail sales) remained robust,

continuing to grow in double digits for passenger vehicles (32.4%) and two-wheelers

Exhibit 1 : Tracking Key High-frequency

(33.6%) in July. Services PMI slowed to 53.3 in July, the lowest since March 2022,

Indicators

from 57.4 in June, owing to weakness in new domestic and export orders. The Naukri

job index softened to 5% YoY in July; performance across sectors remained mixed.

(2) Investments: GST collections (ex cess) (activity in June) edged up to Rs2.1tn in

July, with growth accelerating to 15.3% YoY vs 14% last month. Manufacturing PMI

softened to 53.5 in July from 54.2 in June, owing to weak growth in new orders and

higher suppliers' delivery times (inverted index: shorter delivery times lead to

GST

Credit

Power

TW Sales

PV Sales

MHCV Sales

TW Retail Sales

PV Retail Sales

Goods Exports

Services Exports

QE Dec-25

4.8%

12.4%

-0.3%

19.6%

18.7%

24.8%

25.3%

22.6%

2.4%

7.3%

QE Mar-26

7.7%

15.1%

2.0%

25.6%

12.4%

28.2%

27.2%

26.8%

-2.6%

8.9%

QE Jun-26

8.6%

17.1%

8.8%

22.0%

25.4%

13.7%

18.8%

27.3%

15.8%

9.6%

Jul-26

15.3%

17.7%

11.1%

29.2%

37.6%

40.9%

33.6%

32.4%

Source: CEIC, RBI, MS Autos team, Morgan Stanley Research. Note: Credit

data is adjusted for the change in reporting practises starting Dec-25.

weaker readings), amid easing supply chain disruptions . Credit growth remained

healthy at 17.7% YoY in July, driven by strength across industry credit and retail

loans. Within autos, production of two-wheelers (29.2%) and passenger vehicles

(37.6%) accelerated further, while production of medium and heavy commercial

vehicles (40.9%) improved meaningfully, aided by increased freight availability,

…