Wall Street Turns Positive On India As Lower Oil Prices Lift Market Sentiment

After remaining cautious on India for more than a year, several global investment banks and overseas investors are beginning to take a fresh look at the country's financial markets.

The improvement in sentiment comes as crude oil prices retreat, the rupee stabilises and concerns around India's external finances begin to ease.

Global Investment Banks See Renewed Interest In India

Recent interactions with overseas investors suggest that interest in Indian assets is gradually picking up.

Citigroup Inc said that the Indian team had a total of 36 meetings with institutional investors in the US, and a good number of them showed interest in the Indian market again. Macquarie Capital Securities has also reported a rise in client enquiries after an extended period of subdued activity.

Goldman Sachs has adopted a more constructive view on India, while Barclays believes the improving macroeconomic backdrop could make the country an attractive investment destination once again.

K. Balasubramanian, Chief Executive Officer of Citigroup India, said the prolonged period of weak sentiment appears to be ending as investors begin to recognise improvements in India's fiscal position and currency stability.

Oil Prices And Policy Measures Improve Investor Confidence

One of the biggest changes has come from the sharp fall in crude oil prices.

Brent crude has declined by nearly 30% during the June quarter, returning to levels seen before the recent conflict in West Asia. For India, which imports most of the crude oil it consumes, lower prices help reduce inflationary pressure, improve the current account balance and ease pressure on government finances.

Policy measures introduced by the government and the Reserve Bank of India have also supported sentiment. Steps aimed at attracting foreign investment into government securities and strengthening the rupee have added to investor confidence in recent weeks.

Foreign Flows Show Early Signs Of Recovery

The shift in sentiment is beginning to reflect in market data.

Indian equities outperformed other emerging markets during June by the widest margin in seven months. Foreign investors also bought a record $4.4 billion worth of index-eligible Indian government bonds, while net selling in domestic equities slowed to its lowest level in four months.

The rupee, which had earlier come under pressure, also staged a recovery and emerged as one of Asia's better-performing currencies during the month.

India May Benefit As Investors Look Beyond AI-Focused Markets

For much of the past year, global investors favoured markets such as Taiwan and South Korea because of their heavy exposure to the artificial intelligence boom.

However, some market participants now believe those trades have become crowded, prompting investors to look for diversification across other large emerging markets.

Steven Holden, founder of Copley Fund Research, said portfolio allocations to both India and China are currently close to multi-year lows among active emerging-market fund managers. That, he believes, leaves room for fresh allocations if investors begin rotating away from AI-driven markets.

Another factor working in India's favour is comparatively lower market volatility. In the first half of 2026, the Nifty had 38 trading days when the price changed by at least 1% on that day, whereas MSCI's emerging market and Asian indices had 59 such days. The South Korean Kospi had 79 days with such movements, indicating the relatively less volatile character of Indian equities.

Lower oil prices have further strengthened the investment case. Citigroup has already raised its economic growth forecast for India, while Goldman Sachs has expressed a preference for 30-year Indian government bonds, expecting softer crude prices to support inflation and fiscal stability in the months ahead.

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