Mumbai, Sept. 4 -- Dalal Street heads into the new week riding a wave of strong domestic data, but with a geopolitical overhang that refuses to dissipate.

The domestic data flow was unambiguously strong. India's Q1 FY27 GDP expanded 7.8% year-on-year, well above the RBI's 7% forecast and Q1 FY26's 6.9%. The GDP growth was driven by manufacturing, services, and a sharp surge in gross fixed capital formation. GST collections reinforced the momentum, rising 14.8% year-on-year to Rs 1,99,853 crore in August.

Activity data, however, painted a more nuanced picture. The HSBC India Manufacturing PMI slipped to a five-year low of 52.8 in August. Services offered a partial offset, with the PMI recovering to 54.1, keeping the Composite PMI steady ...