India's GDP Soars to 7.8% in Q3 FY2025-26, Signalling Robust Economic Momentum for February 2026

Breaking: India's GDP Soars to 7.8% in Q3 FY2025-26, Signalling Robust Economic Momentum for February 2026

India's economic powerhouse continues its robust trajectory, with the National Statistical Office (NSO), under the Ministry of Statistics and Programme Implementation (MoSPI), announcing a stellar real Gross Domestic Product (GDP) growth rate of 7.8% for the third quarter of Financial Year 2025-26 (October-December 2025). Released today, February 27, 2026, this critical data point not only exceeds many analyst expectations but also marks the official adoption of the new base year 2022-23 for national accounts, providing a more contemporary and accurate reflection of the evolving Indian economy. This strong performance, building on the 8.4% growth in Q2 FY2025-26, firmly places India as one of the fastest-growing major economies globally, injecting significant confidence into domestic and international markets.

The Catalyst

The impressive 7.8% GDP growth for Q3 FY2025-26 comes on the heels of sustained economic momentum across various sectors. This surge is primarily attributed to robust performance in key economic segments, as detailed in the latest NSO release. The manufacturing sector has been a significant driver, achieving double-digit growth rates in both FY2023-24 and FY2025-26, highlighting a resilient and expanding industrial base. Furthermore, the secondary and tertiary sectors collectively boosted the economy by registering above 9.0% growth rate in FY2025-26. Notably, the 'Trade, Repair, Hotels, Transport, Communication & Services related to Broadcasting, Storage' sector recorded an impressive 10.1% growth at Constant Prices during FY2025-26. The momentum was also supported by strong domestic demand, with both Private Final Consumption Expenditure (PFCE) and Gross Fixed Capital Formation (GFCF) exhibiting more than 7.0% growth rate in FY2025-26.

This official data release is also the first to be based on the new base year of 2022-23, a crucial revision from the previous 2011-12 base. This methodological upgrade aims to incorporate structural changes in the economy, including the increasing prominence of the digital and gig economies, ensuring that the GDP figures are more representative and relevant to current economic realities.

Financial Forensics

The Q3 FY2025-26 GDP figures underscore a period of sustained and broad-based economic expansion for India. The real GDP at Constant Prices in Q3 of FY2025-26 is estimated at ₹84.54 lakh crore, compared to ₹78.41 lakh crore in Q3 of FY2024-25, signifying a 7.8% growth. Simultaneously, Nominal GDP at Current Prices for Q3 FY2025-26 is estimated at ₹90.91 lakh crore, showing an 8.9% growth against ₹83.46 lakh crore in Q3 of FY2024-25.

The Gross Value Added (GVA) also presented a robust picture, with Real GVA in Q3 of FY2025-26 estimated at ₹77.38 lakh crore, a 7.8% growth over the previous year. This strong GVA performance indicates healthy activity across various production sectors, aligning with the overall GDP growth.

FinScann analysis notes that while the 7.8% growth is stellar, it is slightly lower than the 8.4% growth recorded in Q2 FY2025-26. However, the overall annual real GDP growth for FY2025-26 has been upwardly revised to 7.6%, compared to the earlier estimate of 7.4% under the old base year. This consistent high growth, particularly in the manufacturing and services sectors, reinforces India's position as a global economic leader.

Table 1: India's Key Economic Indicators (Q3 FY2025-26 vs. Previous Periods)

Indicator	Q3 FY2025-26 (Growth Rate)	Q2 FY2025-26 (Growth Rate)	FY2025-26 (Annual Estimate)	FY2024-25 (Annual Actual)
Real GDP Growth	7.8%	8.4%	7.6%	7.1%
Nominal GDP Growth	8.9%	N/A	8.6%	9.7%
Real GVA Growth	7.8%	N/A	7.7%	7.3%
Manufacturing Growth	N/A	N/A	Double-Digit	N/A
Services Sector Growth	N/A	N/A	>9.0%	N/A
Source: MoSPI, FinScann Analysis

Market Impact

The robust Q3 GDP growth is a significant positive for the Indian stock market, particularly the NSE Nifty 50 and BSE Sensex. Strong economic performance typically translates into improved corporate earnings, which generally pushes stock prices upwards. Sectors like manufacturing, infrastructure, and banking are likely to see sustained investor interest. The increased domestic consumption and capital formation signal healthy demand, benefiting a wide array of companies.

While the Indian market has seen mixed global cues, sustained Domestic Institutional Investor (DII) support has provided a cushion against volatility, even as Foreign Institutional Investors (FIIs) have shown fluctuating flows. The strong GDP print is likely to further attract FIIs, boosting overall market sentiment and potentially leading to an upward revision of market outlooks. However, investors should remain vigilant regarding potential inflationary pressures that can arise from rapid growth, which could influence the Reserve Bank of India's (RBI) monetary policy decisions.

Key Takeaways

• Sustained Growth: India's economy is demonstrating remarkable resilience and growth momentum, positioning it strongly on the global stage.
• Sectoral Strength: Manufacturing, services (especially trade, hotels, transport), and construction are leading the charge, indicating a broad-based recovery and expansion.
• Domestic Demand as Pillar: Strong private consumption and capital formation remain crucial drivers of India's economic engine.
• Monetary Policy Outlook: While robust growth generally indicates a healthy economy, the RBI will closely monitor inflation. Current signals suggest a low likelihood of immediate rate hikes, with the central bank prioritizing growth stability amidst manageable core inflation.
• Investment Opportunities: The positive economic environment creates opportunities in cyclical sectors sensitive to domestic growth. Investors should look for companies with strong fundamentals poised to benefit from this growth trajectory.

FinScann Verdict

The 7.8% GDP growth in Q3 FY2025-26 under the new base year is a powerful testament to India's economic strength and its decisive path toward becoming a global economic leader. This data confirms FinScann's optimistic outlook for the Indian economy. While inflationary pressures warrant careful monitoring by the RBI, the current growth story presents compelling opportunities for investors. FinScann advises investors to focus on quality stocks in manufacturing, infrastructure, and consumer-driven sectors that are well-positioned to capitalize on this robust economic momentum.

Q: What is India's current GDP growth rate for Q3 FY2025-26? A: India's real GDP grew by 7.8% in the third quarter of Financial Year 2025-26 (October-December 2025). This data was released by the Ministry of Statistics and Programme Implementation today, February 27, 2026.

Q: How does strong GDP growth impact the Indian stock market? A: Strong GDP growth typically has a positive impact on the Indian stock market. It signals a healthy economy, which generally leads to higher corporate earnings and improved investor sentiment, attracting both domestic and foreign investment. This often results in an upward movement of benchmark indices like the Sensex and Nifty 50.

Q: What is the outlook for inflation in India after this GDP data? A: While strong economic growth can sometimes lead to inflationary pressures, current reports suggest that core inflation in India remains subdued. The Reserve Bank of India (RBI) has a mandate to maintain inflation at 4% and will continue to monitor the situation. Although there might be marginal upward revisions in overall CPI projections, the outlook for inflation is considered manageable, with the RBI prioritizing growth.

Q: Will the RBI hike interest rates given this robust growth? A: The likelihood of immediate interest rate hikes by the RBI is currently considered low. The central bank has been focused on supporting growth and has maintained a stable repo rate. While rapid growth can fuel inflation, the RBI's current stance reflects a balance between managing nascent inflationary pressures and ensuring robust economic expansion. However, continuous vigilance on inflation will be key for future monetary policy decisions.

Disclaimer: For information only; not investment advice. Stock market investments carry risks. Please consult a SEBI-registered advisor before investing. FinScann assumes no liability for decisions made based on this report.