Jefferies' Christopher Wood bullish on India as credit growth hits decade high
Synopsis
Despite $25.4 billion in foreign equity outflows this year, Jefferies' Christopher Wood is doubling down on India — pointing to bank credit growth at its fastest pace in over a decade, a $41 billion RBI NRI deposit haul, and a July FII comeback as evidence that India's domestic fundamentals are decoupling from the global risk-off narrative.
Key Takeaways
Christopher Wood of Jefferies remains overweight on India, with a 12 per cent portfolio allocation against an 11.4 per cent benchmark weight.
India's bank credit growth has hit 17–18 per cent year-on-year — the highest in over a decade — led by corporate lending at 20 per cent .
Foreign investors turned net buyers of Indian equities in July , investing $2.45 billion , despite net outflows of $25.4 billion for the year.
Net inflows of $8.7 billion into Indian government bonds recorded since June , following a tax exemption on interest income for foreign investors.
The RBI's NRI foreign currency deposit scheme has attracted approximately $41 billion , with further inflows expected.
The rupee recovered from 96.96 in May to around 95.17 , with Wood projecting further stabilisation.
Christopher Wood, Global Head of Equity Strategy at Jefferies, has maintained a bullish outlook on India, citing accelerating bank credit growth, robust corporate lending, and a stabilising rupee as key pillars of the domestic growth story — even as foreign investors remain net sellers of Indian equities for the year.
Credit Growth at a Decade High
India's system-wide bank credit growth has surged to 17–18 per cent year-on-year, the highest pace in more than a decade, according to Wood's weekly GREED & fear note. Corporate lending has been the standout component, expanding at 20 per cent year-on-year, outpacing agriculture loans at 17 per cent and retail loans at 16 per cent. Auto and property demand have also remained healthy, reinforcing the breadth of domestic consumption.
Foreign Flows: Outflows Persist, but July Marked a Turning Point
Foreign investors have pulled a net $25.4 billion from Indian equities so far this year. However, they turned net buyers in July, investing $2.45 billion — a reversal Wood attributed partly to global investors unwinding positions in the technology-driven memory trade. He described the shift as worth monitoring closely.
On the debt side, foreign investors have recorded net inflows of $8.7 billion into Indian government bonds since the beginning of June, following the government's decision to exempt foreign investors from tax on interest income from such investments. Separately, the Reserve Bank of India's (RBI) scheme to attract foreign currency deposits from non-resident Indians has garnered approximately $41 billion, with Wood expecting inflows to increase further in the coming months.
Rupee Showing Signs of Stabilisation
The rupee weakened to 96.96 against the US dollar in May but had recovered to around 95.17 by the time of the note. Wood said the combination of improved foreign flows into government bonds and the RBI's NRI deposit scheme has provided meaningful support to the currency. 'All this increases the likelihood that the rupee should stabilise,' he wrote.
Jefferies' Portfolio Positioning on India
Wood remains overweight on India within his Asia Pacific ex-Japan portfolio, with India accounting for 12 per cent of the portfolio against a benchmark weight of 11.4 per cent. He also continues to hold Indian government bonds in his global sovereign debt portfolio. His constructive view is notably resilient — it holds even as domestic institutional flows, rather than foreign capital, have been the primary buffer absorbing overseas selling pressure in Indian equities.
Broader Context
This comes amid a global environment where emerging market equities have faced persistent headwinds from a strong dollar and risk-off sentiment. India's relative outperformance on credit fundamentals and domestic demand sets it apart from several regional peers. Notably, this is the second consecutive quarter in which a major global brokerage has flagged India's credit cycle as a structural positive, suggesting the bullish case is gaining traction beyond a single analyst's view.
Point of View
If sustained, signals genuine capex and consumption expansion, not just liquidity-driven froth. The more interesting signal, however, is the $8.7 billion bond inflow since June: foreign capital returning via the debt route, not equities, suggests institutional investors are rebuilding India exposure cautiously, through lower-risk instruments first. The rupee's recovery from 96.96 to 95.17 is real but fragile — it rests partly on the RBI's NRI deposit scheme, a one-time lever. The structural test is whether domestic credit momentum can sustain the growth story once those inflows plateau.
NationPress
10 Aug 2026
Frequently Asked Questions
Why is Jefferies bullish on India despite large foreign equity outflows?
Jefferies' Christopher Wood argues that India's domestic fundamentals — particularly bank credit growth at a decade-high 17–18 per cent and healthy auto and property demand — are strong enough to underpin the growth story independently of foreign equity flows. Domestic institutional flows have helped the broader market absorb overseas selling pressure.
What drove the return of foreign investors to Indian equities in July?
Foreign investors turned net buyers in July, investing $2.45 billion, after being net sellers for most of the year. Wood attributed the reversal partly to global investors unwinding positions in the technology-driven memory trade, calling the shift worth monitoring.
How much have foreign investors put into Indian government bonds?
Foreign investors recorded net inflows of $8.7 billion into Indian government bonds from the beginning of June, following the government's move to exempt them from tax on interest income from such investments.
What is the RBI's NRI deposit scheme and how much has it raised?
The Reserve Bank of India launched a scheme to attract foreign currency deposits from non-resident Indians. According to the Jefferies note, the scheme has garnered approximately $41 billion, with further inflows expected in coming months.
What is Christopher Wood's current portfolio positioning on India?
Wood is overweight on India in his Asia Pacific ex-Japan portfolio, with India at 12 per cent of the portfolio versus a benchmark weight of 11.4 per cent. He also holds Indian government bonds in his global sovereign debt portfolio.
