India's domestic fundamentals remain strong as FPI inflows revive: Jefferies' Chris Wood
New Delhi, Aug 7
Jefferies' Christopher Wood has reiterated a positive outlook on India, citing strengthening domestic fundamentals, improving credit growth and the return of foreign portfolio investors, while making changes to his India-focused equity portfolio.
In his latest GREED & Fear note, Wood said foreign investors turned net buyers of Indian equities in July, investing $2.45 billion as global investors unwound positions linked to the technology-driven memory trade.
He said India continues to stand out among emerging markets on the back of improving macroeconomic indicators, with bank credit growth accelerating to 17-18 per cent year-on-year during 2026 which is the fastest pace in more than a decade.
According to the note, corporate lending has emerged as the strongest driver of credit expansion, growing around 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, it added.
Reflecting his positive stance on the Indian market, Wood reshuffled the India long-only portfolio by replacing many domestic firms' stocks.
Wood also highlighted measures that could support the rupee in the coming months.
He said the Reserve Bank of India's foreign currency deposit scheme for non-resident Indians (NRIs) -- that was launched in June -- has already attracted about $41 billion of inflows, exceeding expectations with collections likely to rise to $80-100 billion over the next two months.
He further noted that 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 encourage additional overseas capital inflows.
The expert further stated that all this increases the likelihood that the rupee should stabilise.
In addition, Jefferies continues to remain constructive on Indian government bonds in its global sovereign debt portfolio.
— IANS
Reader Comments
While the macro numbers look good on paper, I hope this translates into actual job creation and wage growth for the common person. Credit growth is fine, but we need to see consumption demand from the bottom of the pyramid too. Let's not just celebrate FII inflows while the aam aadmi still struggles with inflation.
The RBI's NRI deposit scheme is a masterstroke! $41 billion already and potentially $80-100 billion more? That's massive for rupee stability. It's great to see policymakers being proactive. The exemption on tax for foreign investors in govt bonds is another smart move to attract long-term capital.
Interesting to see global investors turning to India amid the tech trade unwinding. The corporate lending growth at 20% is particularly encouraging — it shows businesses are confident enough to borrow and expand. India's story remains compelling compared to other EMs.
Honestly, all this FPI inflow talk feels disconnected from ground reality. My family runs a small business and getting a bank loan is still a harrowing experience. Paper numbers look great for foreign investors, but let's see when this credit growth actually reaches small enterprises and rural India. 🙏
Wood has been consistently bullish on India, and his calls have mostly been right. The auto and real estate demand staying healthy is a strong signal. Plus, with global investors diversifying away from crowded tech trades, India's manufacturing and financial sectors could see sustained inflows.
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