India Equity Strategy: Oil decline helps the world's largest liquid AI hedge

India's equity rally is gathering steam. Since the early October lows, falling US Treasury yields, easing crude prices and renewed FII buying have lifted risk appetite, and the fundamentals back it up. Q2 FY27 earnings beat expectations (+20% YoY, reported to date), festive auto and passenger vehicle sales came in strong, and macro momentum remains firm. Progress on peace talks could push oil prices even lower towards fair value by stripping out the geopolitical risk premium, a meaningful tailwind given India imports 85-90% of its crude. Cheaper oil means a smaller import bill, a steadier rupee, lower inflation, and fatter corporate margins. MSCI India's earnings revision breadth has flipped positive and consensus has lifted 2026/27 EPS estimates by 0.5%/0.6%. If foreign long-only investors simply neutralized their current underweight in Indian equities, that alone could unlock roughly US$115bn in net inflows. Small- and mid-caps are expected to continue to outpace large caps on earnin