Indian investors are rotating away from precious-metals ETFs as bullion prices ease, with silver funds seeing outflows for the first time in two years. Gold ETF inflows fell sharply in February after a record $3.5 billion January, as the MSCI India gauge trades at its cheapest valuation since late 2023. This shift could strengthen the case for equities.

BNP Paribas strategists see potential upside if Chinese investment returns, following India's cabinet easing rules for Chinese firms after a six-year freeze. The $4.8 trillion market has held up despite higher oil prices, supported by steady local-fund buying. If Chinese inflows revive, that could provide another tailwind to both the economy and the equity market.

However, oil prices remain a major concern, with crude at $120 a barrel earlier this week. Historical data shows the Nifty 50 declined in all but one instance when oil spiked above $100. A sustained increase risks derailing corporate profit recovery, pressuring the rupee through a wider import bill and stoking inflation.