Jefferies’ Christopher Wood Overweights India: 7 Key Drivers

Christopher Wood, the influential ‘Greed & Fear’ strategist at Jefferies, continues to designate India as his largest overweight market within the Asia Pacific ex-Japan region. This strong endorsement comes despite foreign investors being net sellers year-to-date, signaling a deep conviction in India’s economic resilience and market potential.

India’s Enduring Market Strength

Wood actively allocates a 12% weighting for India in his Asia Pacific ex-Japan portfolio, surpassing the 11.4% benchmark. His bullish stance is underpinned by a combination of significant capital inflows and robust domestic economic indicators.

Seven Core Drivers Bolster India’s Appeal

• Foreign equity buying experienced a positive shift in July, with India recording $2.45 billion in net foreign equity purchases, indicating a directional change in investor sentiment.
• Bank credit growth has reached a decade-high, expanding by 17-18% year-on-year, driven significantly by a 20% year-on-year increase in corporate lending.
• The Indian government’s early June decision to exempt bonds from foreign investor taxes attracted substantial net inflows of $8.7 billion into Indian government bonds.
• The Reserve Bank of India’s Non-Resident Indian (NRI) deposit scheme has drawn $41 billion and is projected to double by September, as NRIs leverage high returns.
• The rupee has demonstrated signs of stabilization, moving from 96.96 in May to 95.17 against the US dollar, supported by these bond and deposit inflows.
• Wood’s personal portfolio includes Indian government bonds within his global sovereign debt holdings, reflecting his direct investment conviction.

These combined factors significantly increase the likelihood of the Indian rupee stabilizing. Wood’s analysis underscores a fundamental shift in capital flows, reinforcing India’s position as a preferred destination for foreign investment.