India Equity Market: BlackRock Argues Against Market Shift Towards AI Leaders
India’s equity market is facing challenges due to a lack of direct artificial intelligence (AI) investments and rising oil prices, according to BlackRock. The world’s largest asset manager noted that record foreign outflows and a tough macroeconomic environment have not diminished India’s medium- to long-term investment potential. Natasha Sarkaria, BlackRock’s EMEA investment strategy lead for wealth, stated that while the firm remains constructive on India, it is not in an “outright overweight” position.
BlackRock, which manages over $14 trillion in assets globally, considers India one of its top medium- to long-term emerging market opportunities. The firm cites favorable demographics, infrastructure development, and a robust financial sector as key factors supporting this view. Sarkaria emphasized that as long as India’s GDP continues to grow between 6% and 7%, the economy is likely to maintain its growth trajectory.
Oil prices, foreign outflows weigh on sentiment
BlackRock’s assessment comes during a challenging period for Indian markets. The combination of strong growth and low inflation has been disrupted by the ongoing conflict in Iran, which has led to increased oil and gas prices, a weakened rupee, and heightened concerns over supply disruptions. As the world’s third-largest oil importer, India has seen its market capitalization lag behind AI-driven markets like Taiwan and South Korea, as investors pivot towards semiconductor and chipmaker stocks.
In 2026, the benchmark Nifty 50 and Sensex indices have declined by 11% and 13%, respectively. Despite this downturn, Sarkaria believes the market’s rotation away from India has been excessive. She pointed out that there are still derivative AI opportunities within India. Sarkaria added that as long as inflation remains controlled and growth continues to absorb the impact of rising oil prices, the outlook remains stable.
Financials among preferred sectors
BlackRock maintains a positive outlook on Indian financials, industrials, materials, utilities, and consumer discretionary sectors. The firm is particularly optimistic about the financial sector, highlighting strong credit growth among domestic banks, attractive valuations, and potential support from recent measures by the Reserve Bank of India (RBI).
While Sarkaria did not provide a specific 12-month target for Indian benchmark indices, she indicated that BlackRock anticipates low double-digit earnings growth for the MSCI India index this year. However, she warned that markets may experience volatility in the near term due to higher oil prices, a weaker rupee, and rising input costs, which could impact corporate profitability in the upcoming quarters.
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