Foreign fund inflows resume as oil steadies; analysts eye banking sector

Foreign portfolio investors have resumed purchases in Indian equities after a period of outflows, signalling renewed confidence in the country's growth prospects. The development comes as global crude oil prices have stabilised in the low-$90s per barrel range, easing inflation concerns that have weighed on emerging market valuations in recent months.

Market observers suggest the confluence of these factors is creating a favourable backdrop for Indian equity investors. Banking stocks are emerging as a preferred sector given improving credit offtake and stable deposit growth. Financial services firms expect net interest margins to remain healthy as the monetary cycle stabilises, potentially driving earnings expansion across the sector.

Capital expenditure-focused companies are also attracting investor attention, particularly those benefiting from government infrastructure spending and industrial capacity additions. The spending push is expected to support demand across steel, cement and heavy engineering segments in coming quarters.

Consumption-oriented businesses, from consumer discretionary to fast-moving goods, represent another focal point as rural demand shows signs of acceleration and urban consumption patterns normalise. Moderate oil prices help preserve household purchasing power while keeping input cost pressures contained for many consumer-facing businesses.

While macroeconomic uncertainties persist globally, analysts contend that the combination of returning foreign capital, moderating energy prices and multi-year structural growth themes positions Indian equities favourably for patient investors with adequate risk tolerance.