In its latest GREED & fear report, Jefferies said India’s economic performance has turned out stronger than anticipated six months ago, with bank credit growth accelerating and lending to micro, small and medium enterprises (MSMEs) recording particularly strong growth.
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“The result is that India looks on track to achieve 6.5-7% real GDP growth and nominal GDP growth of around 11-12% this fiscal year,” the report said.
Jefferies said bank credit growth rose to 17.8 per cent year-on-year in July, while loans to MSMEs grew 24.9 per cent. Credit to industry increased 20 per cent, services credit grew 22.9 per cent and corporate lending expanded 21.6 per cent, according to data highlighted in the report.
The brokerage noted that the pickup in corporate lending also suggests that the long-awaited revival in private-sector capital expenditure may finally be taking shape.
“The pickup in corporate lending also suggests that the long anticipated private sector capex cycle may finally be happening,” Jefferies said.The report said the improvement in nominal GDP growth could also translate into stronger corporate earnings. Jefferies’ Head of India Research Mahesh Nandurkar said the acceleration in nominal GDP to support a pickup in earnings growth from 14 per cent in the current fiscal year to 17 per cent in the next fiscal year beginning April 1.
Domestic demand has also remained resilient, Jefferies said, pointing to strong Goods and Services Tax (GST) collections, a recovery in power consumption and an improvement in residential real estate sales.
GST receipts grew 14.8 per cent year-on-year in August, while power demand growth accelerated to 9.4 per cent during April-August, compared with 1.8 per cent in January-March. Residential real estate area sold across India’s top seven cities increased 7 per cent year-on-year in the first seven months of the current calendar year, against a decline of 1 per cent in 2025.
Jefferies also pointed to foreign currency inflows under the Reserve Bank of India‘s scheme, under which the government raised a better-than-expected USD 136 billion of foreign currency deposits from non-resident Indians.
At the same time, Jefferies highlighted the government’s fiscal consolidation path, noting that the fiscal deficit is projected at 4.3 per cent of GDP this fiscal year and is expected to decline further over the coming years.