Wood highlighted that India continues to differentiate itself among emerging markets on the strength of improving macroeconomic indicators. Bank credit growth has accelerated to 17–18 per cent year-on-year in 2026, the fastest pace recorded in more than a decade. Corporate lending has been the primary driver, expanding at around 20 per cent year-on-year, while loans to the agriculture sector rose 17 per cent and retail lending advanced 16 per cent.
Demand conditions in key segments of the real economy also remain healthy, according to the note. Both automobile sales and residential property activity have shown resilience, reinforcing the broader picture of domestic demand strength.
Reflecting this positive assessment, Wood has made adjustments to his India-focused long-only equity portfolio, replacing holdings in several domestic companies as part of a broader reshuffle.
Beyond equities, Wood pointed to policy measures that could lend support to the Indian rupee in the coming months. The Reserve Bank of India’s foreign currency deposit scheme for non-resident Indians (NRIs), introduced in June, has already attracted approximately $41 billion in inflows—exceeding initial expectations. Collections under the scheme are projected to rise further, potentially reaching $80–100 billion over the next two months.
In addition, the government’s decision to exempt foreign investors from tax on interest income earned from investments in Indian government bonds has provided a boost to the sovereign debt market. Wood suggested this step could encourage further overseas capital inflows into the fixed-income space.
Taken together, these developments increase the likelihood that the rupee will stabilise, he said. Jefferies also maintains a constructive stance on Indian government bonds within its global sovereign debt portfolio.
Wood’s comments come at a time when market participants are closely monitoring the interplay between domestic growth indicators and external capital flows. The acceleration in credit growth, particularly in the corporate segment, is being watched as a leading signal of investment and economic activity. Meanwhile, the return of FPI buying after a period of relative caution offers a tangible measure of improving global investor confidence.
The strategist’s note underscores the view that India’s growth story remains anchored in internal demand and policy support rather than solely dependent on external liquidity conditions. By combining strong credit expansion with targeted measures to attract non-resident and foreign capital, policymakers appear focused on reinforcing both the equity and debt markets.
For investors, the combination of accelerating bank lending, resilient consumer-facing demand and renewed foreign interest provides a multi-layered case for engagement with Indian assets. Wood’s portfolio adjustments signal active management within this constructive framework rather than a passive endorsement of the broader market.
As the second half of the year progresses, attention will remain on whether the recent FPI inflows sustain and whether credit growth continues at elevated levels. The early success of the RBI’s NRI deposit scheme and the tax exemption on government bond interest are additional variables that could influence currency stability and fixed-income appetite in the near term.
Overall, the latest assessment from Jefferies reinforces a narrative of underlying strength in India’s domestic economy, even as global market dynamics continue to evolve.
