Jefferies has a cautiously optimistic view on the Indian equity market, highlighting a significant increase in equity supply. Equity supply has risen to around $7 billion per month in the last four months, resulting in a cumulative supply of $60 billion for the year-to-date. This indicates a strong market response to domestic demand.

Despite this positive trend, Jefferies advises a cautious approach to equities in the near term. The IT sector has been upgraded to 'neutral' while the consumer staples sector has also been downgraded to neutral. Jefferies maintains an overweight position on banks, healthcare, telecom, and two-wheelers, considering them as key areas for investment.

The flow of equities as a percentage of household savings is approaching OECD levels, indicating an increase in household participation in the equity market.