New Delhi, Oct. 29 -- Festive demand and sustained public capital expenditure are expected to support India's industrial activity in the second half of FY27, although unfavourable base effects, weak monsoon conditions and higher input costs could weigh on production, according to a report by Union Bank of India.

The report said the outlook would depend on whether improving rural demand and continued investment translate into sustained industrial growth, particularly as manufacturing and consumer durables face a less favourable comparison with the previous year.

"Despite overall moderation, we see some improvement in rural demand as a surprise element despite EI-Nino led volatility. We expect upcoming festive demand and public capex push...