Jefferies says large caps are starting to look more reasonably valued after a period of underperformance relative to mid- and small-cap peers. The brokerage notes that global funds have begun rotating back into India's top-tier stocks, driven by improving earnings visibility and relatively attractive valuations compared to other emerging markets.

Foreign portfolio investors have net bought $2.3 billion worth of Indian equities in the past month, with the bulk flowing into Nifty 50 constituents. This marks a reversal from earlier outflows when richer valuations prompted profit-taking. Jefferies highlights that the price-to-earnings gap between large caps and the broader market has narrowed to its lowest level in two years.

Analysts point to sectoral leaders in financials, consumer staples, and information technology as primary beneficiaries. The renewed interest coincides with the Reserve Bank of India maintaining policy rates, supporting a stable macroeconomic backdrop for equity allocations.