After spending more than a year on the sidelines, global investors are showing fresh interest in India as sentiment begins to improve across the country’s markets.
Citigroup’s India team returned from meetings with 36 US clients, saying appetite for local assets is reviving, a Bloomberg News report said.
Macquarie Capital Securities is seeing a pickup in customer queries after an extended lull. Goldman Sachs Group Inc has turned more positive on the nation, while Barclays Plc says it may finally be time to view the world’s fastest-growing major economy as an investment opportunity.
India had fallen out of favour as investors chased markets with greater exposure to the artificial intelligence boom, while the energy shock triggered by the US-Iran war stoked concerns about the country’s external finances, pushing the rupee to record lows. As those pressures ease, bankers and investors say interest in local assets is beginning to recover.
“The 18-month-long negative cycle on India is eclipsing fast,” K. Balasubramanian, Citigroup’s India chief executive officer, said in an interview. “Investor sentiment is on the cusp of changing. They are beginning to think about India, with the fiscal deficit narrowing and the rupee coming out of the rout loop.”
Policymakers have also helped the turnaround, as measures to draw foreign capital into government debt and shore up the rupee have boosted investor confidence.
The change is starting to show up in markets. Indian equities beat emerging-market peers in June by the most in seven months, global funds bought a record $4.4 billion of index-eligible government debt and foreign outflows from stocks were the smallest in four months. The rupee has rebounded, ranking as one of Asia’s strongest-performing currencies last month.
India’s lack of AI-linked plays may become less of a drawback as doubts grow over how long the rally in AI-heavy markets such as South Korea and Taiwan can last.
Financial stocks have drawn the biggest fortnightly inflows in 14 months in the second half of June. Foreign portfolio investors bought ₹146.34 billion ($1.54 billion) of banking stocks over the period, National Securities Depository data released on Tuesday showed.
“Meaningful FPI buying in large banks aided by steady earnings outlook could be enough to power Nifty higher after the 2026 underperformance so far,” said Abhay Laijawala, chief investment officer, India, Lighthouse Canton.