New project announcements remain at a multi-year low, while production was depressed by weak consumer durables, non-durables, intermediate and capital goods, the bank pointed out.
Surveys by the Reserve Bank of India (RBI) reflect downbeat consumer sentiments towards income and employment conditions.
Indirect and direct tax collections also reflected slower demand, as did sluggish credit growth as banks and non-banks tightened due diligence, it said.
Providing a counterweight, fiscal spending likely quickened after slower disbursements in the first half of the year due to the general elections.
Net trade is unlikely to be a drag with weak exports accompanied by a sharper fall in non-oil, non-gold imports.
"Under GVA (Gross Value Added), we expect 4.1 per cent print, with most sectors barring public administration to have slowed in the quarter," said DBS.
The third quarter economic numbers are due this week.
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