Goldman Sachs upgrades India view on resilient earnings and stable rupee

Goldman Sachs altered its stance on Indian equities, and the shift carries more weight for market positioning than for any single data release, according to the note. The bank presents India as having absorbed the worst external shocks of the year — capital outflows, rupee depreciation and an oil spike triggered by the US-Iran standoff — without a crack in domestic fundamentals. A forward price-to-earnings multiple near 20x, a decade low, gives Goldman a valuation case alongside the macroeconomic argument, and the AI-trade diversification pitch casts India as a way to get AI-adjacent exposure without the concentration risk of leading US and Northeast Asian stocks. The currency story is worth separate attention: the Reserve Bank of India has shown it can defend the rupee through targeted swap lines, lowering one of the bigger tail risks for foreign investors returning to the market. Goldman’s framing suggests it regards that credibility as lasting, not a one-off intervention.

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The iShares MSCI India ETF (INDA), managed by BlackRock, is the most common vehicle for US and international investors to gain broad access to Indian equities without directly purchasing on the NSE or BSE. It mirrors the MSCI India Index, the same benchmark Goldman uses for its earnings and valuation projections, and holds a market-cap-weighted portfolio of large and mid-cap Indian firms spanning financials, IT, energy and consumer sectors, with significant positions in HDFC Bank, Reliance Industries and Infosys.

Since INDA trades on NYSE Arca in US dollars during US market hours, it serves as a convenient proxy for Indian market sentiment without requiring access to local exchanges or rupee conversion. That is one reason it is often used as a reference for India-focused commentary aimed at Western audiences.

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Goldman's core thesis is that India endured the worst of 2026 without its fundamentals collapsing, and it is precisely that resilience that is drawing money back into the market.

Summary:

• Goldman Sachs indicates India is moving into a more constructive period after a first half of 2026 that saw foreign capital flight, a weakening rupee and an oil shock from the US-Iran conflict.
• MSCI India earnings are expected to grow 12% in 2026 and 16% in 2027, Goldman projects, despite pressure from higher energy costs.
• First-quarter 2026 real GDP expanded 7.8% year-on-year, leaving Goldman's full-year 6.8% forecast intact.
• MSCI India's one-year forward P/E has contracted to roughly 20x, a decade low, after the market correction.
• Goldman touts India as a diversification opportunity away from the concentrated AI trade, pointing to strong domestic demand, expansion of digital infrastructure and growth in IT integration, data centers and small to mid-cap innovation.
• The bank attributes stabilization of the rupee and anchored volatility during external shocks to the RBI's liquidity management and a strategic forex swap facility.

Goldman Sachs is adopting a more positive outlook on Indian equities, contending that the market has surpassed the worst of the upheavals that struck it during the first six months of 2026. In a research note from its fundamental equity insights team, the bank stated that India withstood foreign capital outflows, a falling rupee and an oil price shock originating from the US-Iran confrontation without its core macroeconomic fundamentals deteriorating, a resilience the bank views as strengthening the country's long-term investment story.

Corporate profits have remained resilient even with margin compression from elevated energy expenses, and Goldman has kept its MSCI India earnings estimate of 12% growth in 2026, accelerating to 16% in 2027. The bank also noted first-quarter real GDP expansion of 7.8% year-on-year, which supports its full-year 2026 growth projection of 6.8%, and attributed the stabilization of financial conditions, the anchoring of currency volatility and the support of domestic credit growth through the stress period to timely liquidity management by the Reserve Bank of India.

Valuations form a key pillar of Goldman's case for re-engaging with the market. After the correction earlier in the year, MSCI India's one-year forward P/E has dropped to roughly 20 times, a decade low, which the bank presents as a more compelling entry point because the underlying earnings path remains largely unchanged. Goldman also framed India as a means for investors to diversify their global AI trade exposure without concentrating in other regions, citing robust domestic demand, growing digital infrastructure, and emerging opportunities in IT integration, data centers and small to mid-cap innovation as supporting that view.

Regarding currency, Goldman specifically highlighted the RBI's use of a strategic foreign exchange swap window as a crucial stabilizing element, which helped settle the rupee and increase dollar liquidity during a time of external shocks and elevated geopolitical risk. The bank conceded that India is still vulnerable to global macroeconomic, commodity and geopolitical events, but stated that domestic conditions are stabilizing, with structural reforms and solid domestic demand continuing to support the long-term thesis. Aman Batra, Goldman's portfolio manager and head of India equities, remarked that the combination of stable earnings, a more stable currency and subdued oil prices indicates that capital is flowing back into the market.