Foreign investors have poured money into Indian government bonds at the fastest pace in 15 months, driven by a cooling in global oil prices and a thawing in Middle East geopolitical tensions.
The shift in capital flows marks a decisive turn for a market that had been squeezed by rising energy costs and regional instability over recent weeks.
The repricing of risk is directly linked to optimism surrounding a potential peace deal between the United States and Iran.
As the prospect of a broader regional conflict recedes, the risk premium that had been baked into energy prices has evaporated.
This drop in oil costs removes a critical headwind for India, a nation that imports the vast majority of its crude, and signals a return of appetite for emerging-market debt.
The relief is particularly significant for the Reserve Bank of India, which recently held its benchmark interest rate steady at 5.25%.