Jefferies global strategist Christopher Wood has reaffirmed a constructive outlook on India, pointing to strengthening domestic fundamentals, accelerating credit growth, and a decisive return of foreign portfolio investors (FPIs) to Indian equities. The assessment, published in his closely tracked GREED & Fear note, coincides with portfolio changes Wood made to his India long-only equity holdings.

FPI Inflows Return in Force

Foreign investors turned net buyers of Indian equities in July 2026, pumping in $2.45 billion, according to Wood's note. The reversal came as global investors unwound positions linked to the technology-driven memory trade, redirecting capital toward emerging markets with stronger near-term fundamentals. India was a primary beneficiary of that rotation.

Credit Growth at Its Fastest Pace in Over a Decade

Bank credit growth accelerated to 17–18 per cent year-on-year during 2026 — the fastest pace in more than a decade, according to Wood. Corporate lending emerged as the strongest driver, expanding approximately 20 per cent year-on-year, while loans to the agriculture and retail segments rose 17 per cent and 16 per cent, respectively. Demand for automobiles and residential property also remained healthy, the note added.

Rupee Support Measures Draw Attention

Wood highlighted two policy measures that could underpin the rupee in the months ahead. The Reserve Bank of India's (RBI) foreign currency deposit scheme for non-resident Indians (NRIs), launched in June 2026, has already attracted approximately $41 billion in inflows — exceeding initial expectations — with collections reportedly on course to reach $80–100 billion over the following two months.

Separately, the government's decision to exempt foreign investors from tax on interest earned from investments in Indian government bonds has already supported the sovereign debt market and could, according to Wood, encourage further overseas capital inflows. Taken together, he argued, these measures increase the likelihood that the rupee will stabilise.

Portfolio Reshuffle and Bond Market Stance

Reflecting his positive view, Wood reshuffled his India long-only portfolio by replacing several domestic firms' stocks, though specific names were not detailed in the note. Jefferies also continues to maintain a constructive position on Indian government bonds within its global sovereign debt portfolio — a signal of confidence in India's fiscal trajectory at a time when emerging-market debt is under scrutiny globally.

This comes amid a broader reassessment of emerging-market allocations by global funds, with India increasingly positioned as a relative safe haven given its domestic consumption base and improving macro indicators. With FPI flows turning positive and credit growth at multi-year highs, the near-term outlook, at least as Jefferies sees it, points toward continued resilience.