Christopher Wood, Global Head of Equity Strategy at Jefferies, has reiterated his bullish stance on India. Citing the country’s strengthening economic fundamentals, improved credit growth, and the return of Foreign Portfolio Investors (FPIs), he has also made adjustments to his India-focused equity portfolio.
FPIs turn net buyers in July
In his latest ‘Greed & Fear’ note, Wood stated that foreign investors turned net buyers of Indian equities in July, investing $2.45 billion. This occurred at a time when global investors were trimming their exposure to technology-related ‘memory trades’.
India stands out among emerging markets
According to Wood, India continues to stand out among emerging markets due to improving macroeconomic indicators. Bank loan growth has accelerated to 17–18 percent year-on-year—the fastest pace in over a decade.
Corporate lending has emerged as the strongest driver of bank credit expansion, growing by nearly 20 percent year-on-year. Meanwhile, credit to the agricultural sector grew by 17 percent, and the retail sector saw a 16 percent rise. Demand for automobiles and residential real estate also remains robust.
Portfolio adjustments and support for the rupee
Reflecting his positive outlook on the Indian market, Wood adjusted his ‘India Long-Only’ portfolio, swapping shares of several domestic companies. The report also highlighted measures likely to support the rupee in the coming months. He noted that the Reserve Bank of India’s foreign currency deposit scheme for Non-Resident Indians (launched in June) has attracted approximately $41 billion in investments so far. This figure exceeds expectations, and the total could rise to between $80 billion and $100 billion over the next two months.
Additionally, the government’s decision to exempt foreign investors from taxes on interest income earned from Indian government bonds has already provided support to the sovereign debt market. This could boost additional capital inflows from abroad. These developments have increased the likelihood of the rupee stabilizing. Jefferies maintains a positive stance on Indian government bonds within its global government bond portfolio.
