BofA Global Research has raised its estimate for India's economic growth in the July-September quarter to 7.7% from 7.2%, citing resilient manufacturing, industrial activity and consumer demand despite disruptions in West Asia and uneven monsoon rainfall.

The brokerage expects gross value added to grow 8.1% year on year during the quarter, with industry and services offsetting weakness in agriculture.

Industrial production growth accelerated to 7.3% in July-September from 6.2% in April-June, while manufacturing output increased 8.1%, BofA said in a research report.

It expects manufacturing GVAto expand around 12% and construction activity to grow about 7%, while agricultural output is likely to remain flat.

Bank credit growth remained elevated at around 20%, while deposit growth approached 15%. Automobile sales, electricity demand and freight activity also indicated sustained domestic demand, the report said.

However, construction indicators showed some moderation amid subdued public capital expenditure.

BofA expects export growth to slow to 5% in July-September from 12% in the preceding quarter, while import growth is estimated to have rebounded to 7% from a contraction of 1.1%, reflecting festive demand and higher energy prices.

The brokerage expects GDP growth to trail GVA growth because of weaker net indirect taxes, partly reflecting subdued goods and services tax collections.

It estimates nominal GDP growth at 13.9% for the quarter, potentially the highest in nearly four years.

BofA expects economic growth to average 7.7% in the first half of 2026-2027, compared with 8.1% in the preceding six months.

It retained its full-year GDP growth forecast at 7.4% for 2026-2027, with modest upside risks, and maintained its 2027-2028 projection at 7.5%.

The brokerage identified elevated oil prices, geopolitical uncertainty, El Niño-related agricultural risks and tighter monetary policy as potential headwinds.

BofA expects the Reserve Bank of India to raise its policy rate by another 75 bps over the next six to nine months, potentially increasing borrowing costs and moderating consumer demand.

The July-September GDP data are scheduled for release towards the end of November.