India's Economy Resilient Pre-Conflict: Monitor Domestic Demand & Inflation

The Indian economy showed robust activity across supply and demand indicators up to February 2026, prior to the escalation of the Israel-Iran conflict. This strong performance was attributed to domestic demand, infrastructure expansion, and policy support, with manufacturing, services, vehicle sales, and digital payments all showing growth.

This pre-conflict data highlights the underlying strength and resilience of the Indian economy, suggesting it has a solid foundation to absorb external shocks. However, the CEA's warning about a 'significant' hit to growth and inflation post-March indicates that while the base was strong, future impacts from geopolitical events are still a major concern for market stability and investor sentiment.

The broad positive economic indicators generally support sectors driven by domestic consumption and investment. Companies in the automobile sector (e.g., MARUTI, M&M, TATAMOTORS), financial services (e.g., HDFCBANK, ICICIBANK), and infrastructure (e.g., L&T, ULTRACEMCO) would have benefited from this robust activity. However, the potential for future inflation and growth slowdown could temper enthusiasm across the board.

Traders should closely monitor the March and April 2026 economic data releases for signs of the 'significant' hit warned by the CEA, particularly inflation figures and manufacturing/services PMIs. Any sustained weakening in domestic consumption indicators or a sharp rise in crude oil prices due to geopolitical tensions would be critical to watch for market direction.

• •Economic activity in India remained robust up to February 2026.
• •Strong performance across both supply- and demand-side indicators.
• •Resilience built on domestic demand, infrastructure expansion, and policy support.
• •High-frequency indicators showed manufacturing and services activity in expansionary territory.
• •Consumption indicators like vehicle sales and digital payments showed strong growth.