New Delhi, Aug. 9 -- India's domestic growth momentum and improving capital flows could provide support to the Indian markets in the coming months, even as foreign investors' overall equity exposure remains weak, according to a Jefferies research report.

Jefferies noted that India recorded net foreign buying of US$2.45 billion in equities in July, helped by an unwind of the memory trade. However, foreign investors remained net sellers of Indian equities to the tune of US$25.4 billion year-to-date, highlighting continued pressure from overseas flows.

The report said the more encouraging signal is coming from the domestic economy, with bank credit growth accelerating to 17-18 per cent year-on-year, the highest level in more than a decade....