Goldman’s shift in tone matters more for positioning than for any single data point in the note, framing India as having absorbed its worst external shocks of the year, capital outflows, rupee weakness and an Iran-driven oil spike, without the domestic fundamentals cracking. A decade-low forward P/E of around 20x gives the bank a valuation argument to lean on alongside the macro one, while the AI-trade diversification angle positions India as a way to gain AI-adjacent exposure without the concentration risk of the dominant US and Northeast Asian names. The currency stabilization piece is worth watching separately: a Reserve Bank of India that has shown it can defend the rupee through targeted swap lines reduces one of the bigger tail risks for foreign investors re-entering the market, and Goldman’s framing suggests it sees that credibility as durable rather than a one-off intervention.
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On the chart above.
INDA is the iShares MSCI India ETF, run by BlackRock, and it’s the most widely used way for US-based and international investors to get broad exposure to Indian equities without buying shares directly on the NSE or BSE. It tracks the MSCI India Index, the same benchmark Goldman’s note references for its earnings and valuation calls, holding a market-cap-weighted basket of large and mid-cap Indian companies across financials, IT, energy, and consumer sectors, with heavy weightings toward names like HDFC Bank, Reliance Industries, and Infosys.
Because it trades on the NYSE Arca in US dollars during US market hours, it’s also a convenient proxy for tracking Indian market sentiment without needing access to Indian exchanges or dealing with rupee conversion, which is part of why it tends to be the go-to reference chart for India-focused commentary aimed at a Western audience.
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Goldman’s message is that India weathered the worst of 2026 without its fundamentals breaking, and that’s exactly why the money is starting to come back.
Summary:
- Goldman Sachs says India is entering a more constructive phase after a first half of 2026 marked by foreign capital outflows, rupee depreciation and an oil shock tied to the US-Iran conflict
- The bank expects MSCI India earnings growth of 12% in 2026 and 16% in 2027 despite energy-related margin pressure
- Real GDP grew 7.8% year-on-year in the first quarter of 2026, keeping Goldman’s full-year forecast on track at 6.8%
- MSCI India’s one-year forward price-to-earnings ratio has fallen to around 20x, a decade low, following the market correction
- Goldman highlights India as a diversification play from the global AI trade, citing resilient domestic demand, digital infrastructure growth and opportunities in IT integration and data centers
- The bank credits the Reserve Bank of India’s liquidity management and a strategic foreign exchange swap window with stabilizing the rupee and anchoring volatility through the external shocks
Goldman Sachs is turning more constructive on Indian equities, arguing the market has moved past the worst of the shocks that battered it in the first half of 2026. In a note from its fundamental equity insights team, the bank said India weathered foreign capital outflows, a depreciating rupee and an oil price shock stemming from the US-Iran conflict without its underlying macroeconomic fundamentals breaking down, a resilience it sees as reinforcing the country’s longer-term investment case.
Corporate earnings have held up despite margin pressure from higher energy costs, with Goldman maintaining its forecast for MSCI India earnings growth of 12% in 2026, accelerating to 16% in 2027. The bank also pointed to real GDP growth of 7.8% year-on-year in the first quarter, which keeps its full-year 2026 growth forecast on track at 6.8%, and credited timely liquidity management from the Reserve Bank of India with stabilizing financial conditions, anchoring currency volatility and supporting domestic credit growth through the period of stress.
Valuations are a central part of Goldman’s argument for re-engaging with the market. MSCI India’s one-year forward price-to-earnings ratio has fallen to around 20 times, a decade low, following the correction earlier in the year, which the bank frames as a more attractive entry point given the underlying earnings trajectory has stayed largely intact. Goldman also positioned India as a way for investors to diversify exposure to the global AI trade without relying on the more concentrated bets elsewhere, pointing to resilient domestic demand, expanding digital infrastructure, and growing opportunities in IT integration, data centers, and small and mid-cap innovation as supporting that thesis.
On currency, Goldman singled out the RBI’s deployment of a strategic foreign exchange swap window as a key stabilizing factor, helping steady the rupee and boost dollar liquidity through a period of external shocks and heightened geopolitical tension. The bank acknowledged India remains sensitive to global macro, commodity, and geopolitical developments, but said domestic conditions are stabilizing, with structural reforms and robust domestic demand continuing to underpin the longer-term thesis. Aman Batra, Goldman’s portfolio manager and head of India equities, said the combination of stable earnings, a steadier currency, and calmer oil prices means the money is returning to the market.
This article was written by Eamonn Sheridan at investinglive.com.