BlackRock Says Indian Markets Have Been 'Over-Punished' Amid AI Rotation and Oil Price Pressures
BlackRock, the world's largest asset manager with $14 trillion in assets under management, argues that Indian equity markets have been excessively penalized by investors rotating toward AI-driven markets like Taiwan and South Korea. The firm attributes the market weakness to a combination of rising oil prices, foreign fund outflows, and a perceived lack of direct AI exposure, despite India's strong macroeconomic fundamentals. BlackRock maintains a constructive long-term outlook on India, citing favorable demographics, infrastructure development, and indirect AI opportunities, while recommending Indian financials and industrials as preferred sectors.
BlackRock's EMEA investment strategy lead Natasha Sarkaria stated that Indian markets have been disproportionately punished for lacking a direct artificial intelligence play and for exposure to rising oil prices, despite the country's medium- to long-term investment prospects remaining intact. India's benchmark indices—Nifty 50 and Sensex—have declined 11% and 13% respectively so far in 2026, as market capitalization has shifted toward semiconductor and chipmaker stocks in Taiwan and South Korea. The challenging environment stems from geopolitical tensions in Iran pushing up oil and gas prices, weakening the rupee, and triggering record foreign fund outflows. However, BlackRock argues this rotation has been excessive, noting that India offers indirect AI-related opportunities and maintains favorable conditions with 7.8% GDP growth in the March quarter and RBI support measures. The asset manager remains particularly bullish on Indian financial stocks, citing strong credit growth, attractive valuations, and expects low double-digit earnings growth for the MSCI India index this year, though it cautioned near-term volatility could persist.
What different sources said
- Times of IndiaCenter
Markets dumped India for AI stars. BlackRock says that’s a mistake
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