"He's going really well. He's been everywhere we want him to be and that's great.
"For us, Kane playing T20 cricket is the right way forward for the short term. It means we can manage his loads a little bit more. And we have a little bit more of a clear idea around how many balls he will be hitting to make sure he is loading the elbow progressively, with a view to him being right for the tests in the UK which we will be really hopeful for."
With 12 players away in India, Stead said it was a good opportunity for a couple of new names in the Black Caps squad.
Wellington Firebirds all-rounder Michael Bracewell and Central Stags wicketkeeper Dane Cleaver, who was named in the one-off T20 clash, are set to make their Black Caps debuts.
"It's a great opportunity," Stead said. "Every time a new player gets selected for New Zealand and play for the Black Caps, it's exciting for them and exciting for our team. I think the natural opportunity that's come around with 12 guys being essentially ruled out by playing in the IPL is exciting for us.
"We try and show loyalty to those that have been in our squad and I think that's been part of the reason we've had some of the success we've had. We don't make it to be easy to get into the teams, but Michael's been knocking on the door for a while now. He's a true all-rounder. He's got some great skills in all three forms of the game, so I'm looking forward to seeing what he can bring."
Black Caps ODI and T20 squads for Netherlands tour:
Tom Latham (c) (wk)
Doug Bracewell
Michael Bracewell
Mark Chapman
Dane Cleaver (wk) – T20 only
Colin de Grandhomme
Martin Guptill
Matt Henry
Kyle Jamieson – ODI only
Scott Kuggeleijn – T20 only
Henry Nicholls – ODI only
Ben Sears – T20 only
Ish Sodhi
Ross Taylor – ODI only
Blair Tickner
Will Young
New Zealand IPL players: Kane Williamson (Sunrisers Hyderabad), Lockie Ferguson (Gujarat Titans), Trent Boult (Rajasthan Royals), Adam Milne (Chennai Super Kings), Mitchell Santner (Chennai Super Kings), Tim Southee (Kolkata Knight Riders), Jimmy Neesham (Rajasthan Royals), Glenn Phillips (Sunrisers Hyderabad), Devon Conway (Chennai Super Kings), Finn Allen (Royal Challengers Bangalore), Tim Seifert (Delhi Capitals), Daryl Mitchell (Rajasthan Royals).