Global investors are re-engaging with India's markets after a year on the sidelines, driven by improving sentiment and easing pressures. Citigroup Inc. reports a revived appetite for Indian assets among its US clients, with Macquarie Capital Securities seeing a pickup in customer inquiries. Goldman Sachs Group Inc. has adopted a more positive stance, while Barclays Plc suggests India is becoming an attractive investment opportunity again.

Previously, India had lost favor as investors gravitated towards AI-driven markets, and concerns over external finances due to oil price shocks weighed on the rupee. However, declining crude prices, which benefit India as the world's third-largest oil importer, alongside policy measures to attract foreign capital and stabilize the rupee, are boosting confidence. Indian equities outperformed emerging-market peers in June, and global funds made record purchases of index-eligible government debt.

While risks like a weak monsoon and a strong dollar persist, the narrative is shifting. The nation's economy, still growing near 7%, is now seen as more attractively priced. Policymakers' efforts, including tax changes on foreign-held government debt and central bank swap initiatives, are bolstering investor confidence and could lead to substantial passive inflows if India joins major global indices.