FY26 Growth -Q2 FY26 GDP growth, printed at a 2-year high of 8.2%. Front loading of exports to US as well as inventory build-up ahead of GST rate rationalization, are likely to have supported real growth along with a weak GDP deflator.  Taking on board the Q2 FY26 growth forecast, we have upped our FY26 full year growth forecast to 7.2%. The hit to exports owing to US imposed 50% tariff has been lower than anticipated so far. Having said, growth is expected to undergo a moderation in H2 FY26. India’s CPI inflation plunged to a record low of 0.25%YoY in Oct-25 from 1.44% in Sep-25. We lower our FY26 CPI inflation forecast of 2.1%. The continued comfort on food price until end of FY26, along with impact of GST rate rationalization, commodities (excluding precious metals) continuing to remain range bound have prompted a downward revision. In the money markets, RBI’s FX intervention to curb INR volatility is offsetting the impact of CRR cuts. To neutralize this, we expect Rs 500 bn OMO purchases in Q4 FY26 – the requirement could increase to Rs 3.5 tn if there is a delay in deal-making with the US. We push forward our 25 bps rate cut call amidst a pickup in INR depreciation and robust GDP data. While we retain our 10Y g-sec yield at 6.30% for Mar-26, we now attach an upside risk to the same. The INR scaled a fresh record low by breaching the 90 level in Dec-25. While the move caught market participants off guard, the accompanying volatility does not appear excessive Assuming India-US trade deal by Dec-25, we revise our FY26 current account deficit forecast to 1.3% of GDP, up from 0.8% projected earlier (and 0.6% in FY25) - this could take the BoP position towards a deficit of USD 14 bn in FY26. However, a delay in securing the trade deal beyond Mar-26 could result in the FY26 current account deficit widening to 1.5% of GDP, accompanied by a deeper BoP deficit of USD 30 bn We maintain our USDINR forecast of 89.5 for Mar-26 (to be reviewed in case of delay in announcement of India-US trade deal)