BlackRock’s Vivek Paul on why India stays a top pick for Investors.

The BlackRock Investment Institute continues to view India as a prime investment hub, even amid short-term market volatility. Vivek Paul, a senior investment strategist at BlackRock, asserts that India's strong structural growth potential positions it as a long-term outperformer in the global investment landscape.

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Paul emphasized, "For investors with a horizon of five to ten years, we would be constructing portfolios today leveraging our core expertise, with a higher allocation than the benchmark weight," during an ET Now discussion.

BlackRock maintains an overweight position on both Indian equities and bonds, citing the country's favorable demographics and economic resilience. The firm believes that India’s unique positioning will allow it to benefit from global economic shifts in the coming years.

India’s Strong Growth Drivers

Paul remains optimistic about India’s long-term economic potential, encouraging investors to increase their exposure beyond benchmark allocations.

"India presents substantial structural opportunities. The country benefits from strong demographic trends and a multi-aligned geopolitical stance, which is likely to serve it well in the future," Paul remarked.

One of the key factors driving this optimism is India’s growing working-age population. Paul pointed out that while many developed markets and even China will experience a labor force decline, India will witness an increase in its working-age demographic.

"Over the next two decades, most developed nations and China will witness a decline in their working-age population. Conversely, India is set to experience substantial growth in this segment. Given the current geopolitical landscape, India's balanced global positioning is likely to work to its advantage," Paul elaborated.

This demographic shift is expected to fuel economic expansion, drive consumer demand, and support robust corporate earnings growth in India. Additionally, as global supply chains diversify, India is emerging as an attractive alternative to China, further strengthening its investment case.

Market Fluctuations vs. Long-Term Fundamentals

Although short-term economic cycles may lead to temporary market fluctuations, India’s long-term fundamentals remain robust.

"Market cycles are inevitable. Liquidity remains tight, consumption is facing challenges, and global uncertainties persist. However, as these factors stabilize, the focus will return to underlying fundamentals," Paul explained.

Investors should differentiate between short-term volatility and long-term growth trends when making investment decisions. Paul acknowledges concerns about market valuations but believes that India remains reasonably priced relative to its potential.

"If we consider the risk premium on Indian stocks, I would argue that they are not excessively priced from a historical standpoint. Factoring in future earnings growth and evolving interest rate cycles, Indian equities continue to present an attractive investment opportunity," he stated.

Strategic Investment Approach

Despite concerns over valuation, Paul argues that expected earnings growth and interest rate trends justify India's market positioning. Investors should focus on large-cap Indian equities with strong earnings potential while maintaining selective bond exposure for stability.

BlackRock believes that international investors will increasingly look to tap into India’s opportunities as market attention shifts back to fundamentals.

"As fundamentals regain prominence, global investors will seek exposure to India's opportunities," Paul emphasized.

India as a Key Component of Global Portfolios

Even with short-term volatility, Paul sees India as an essential component of a globally diversified portfolio.

"Structurally, India presents significant opportunities. With strong demographic trends, a favorable geopolitical stance, and sustained economic momentum, the country is well-positioned for future growth," he stated.

As global economies adjust to shifting interest rate cycles, supply chain realignments, and demographic transitions, India stands out as a long-term investment winner. Paul advises investors to maintain a long-term perspective, prioritize structural growth over cyclical fluctuations, and consider India a fundamental part of their global portfolio strategy.

With its expanding workforce, growing consumer market, and rising geopolitical significance, India is poised to play a major role in global economic growth for years to come.