That shift could accelerate from Indian government moves to improve the sector. For example, New Delhi announced last October that it would recapitalize state banks to the equivalent of $32 billion.
"The overall opportunity for allocations to banks/financials in India may now be widening and our view for overall growth driven by domestic recovery remains well supported," Gupta said.
"The recap should also free up the ability of state banks to lend, which should support growth, particularly in rural segments of the country, which is where the state-owned banks tend to play a bigger role," she added.
India's macroeconomic picture has yielded positive news recently. On Monday, the government announced that its economic growth for the coming fiscal year would reach between 7.0 and 7.5 percent, meaning that India would regain its title as the world's fastest growing major economy.
Additionally, India's private sector is "one of the least leveraged, which should put its financials in the spotlight," Renata Klita, senior equity analyst at investment firm London and Capital, told CNBC.