Remain structurally bullish on India despite headwinds: Ben Powell, BlackRock

The long-term story as regards India -demographics, reforms, digitalization, and improving efficiency- remains intact, Powell said.

As the West Asia war completes two months, Ben Powell, chief investment strategist for APAC at BlackRock, tells Puneet Wadhwa in an interview in New Delhi that the three most important factors shaping his investment decisions over the next six months would include earnings, interest rates and the inflation trajectory. Inflation, he said, is particularly critical, as it influences both rates and market dynamics. Edited excerpts:

 

How do you assess the last two months of the West Asia conflict? What is priced in, and what could surprise markets?

 

Looking ahead, the key question is duration. The Strait of Hormuz is still closed, and we effectively have a double blockade, with both Iran and the US restricting the flow of energy. There are many other critical goods and commodities affected. So, it’s a broader supply issue, though energy remains central.

 

 

Markets, in my view, are still reasonably optimistic that a resolution can come soon. We don’t know when, but there are encouraging signs. It’s complicated and will take time, with ups and downs.

 

That said, economically, nobody is winning this war—it’s a problem for the entire world, including Iran. It creates a shared incentive for normalization and reopening of the Strait. However, we should remain uncertain about timing—it could take days, weeks, or longer.

 

When do you think markets might start losing hope of a resolution?

 

Markets never fully lose hope. But an important shift could come if the Strait remains closed—moving from high prices to no prices. Commodities are physical. There’s a real risk of moving from expensive supply to outright shortages—where you simply cannot get the product. 

 

We’re already seeing early stress in markets like jet fuel and diesel. This is leading to early signs of demand destruction—for example, people choosing not to fly because ticket prices are too high due to fuel costs. If we move from high prices to shortages, demand destruction will intensify, creating a severe economic shock, especially for energy-importing economies.

 

Would that be the point when markets start to weaken?

 

Potentially. Right now, markets are still relatively optimistic. But the real issue is inflation. Energy feeds into everything—every sector depends on it. If prices rise, costs get passed on to consumers. This creates inflationary pressure across the economy. And one must understand the sequence. First, impact on energy markets, followed by a spillover into fixed income via inflation and lastly higher interest rates becoming a headwind for equities. 

 

However, equities are also driven by earnings. As we’ve seen in the US, even with rising rates, strong earnings—especially in recent years—have supported markets. So interest rates matter, but they are not the only factor.

 

Does the UAE’s decision of exiting OPEC complicate oil markets?

 

Not particularly. The UAE has been signaling this for some time, and it’s not unprecedented—Qatar exited in 2019. More broadly, this reflects a global trend toward fragmentation. Many international institutions are under pressure, and countries are increasingly focused on self-reliance. The UAE’s move fits into this broader shift toward independent policymaking and prioritizing national interests.

 

Are equity investors becoming more risk-averse as the war drags on?

 

Globally, not really. We are in a very unusual market environment. On one hand, there are clear headwinds—geopolitics, inflation, uncertainty around interest rates. But these are being outweighed by the massive AI-driven earnings boom. It is concentrated in a few companies, which creates some discomfort, but the scale of earnings growth continues to surprise positively. So despite risks, investors remain constructive because they don’t want to miss what could be the defining investment theme of our time.

 

What about India—are investors turning cautious here?

 

India’s situation is more nuanced. Structurally, we remain very positive. The long-term story—demographics, reforms, digitalization, and improving efficiency— remains intact. However, in the short term, there are challenges. 

 

About 18 months ago, valuations were quite high. Since then the global AI boom has shifted investor focus to other markets like Korea, Taiwan, and parts of China. Rising energy prices are a headwind for India as a major energy importer. 

 

While some short-term capital has flowed out, it does not change the long-term conviction. Foreign direct investment remains strong.

 

Do you expect a fuel price hike in India?

 

We remain structurally bullish on India despite headwinds. However, in the short term, energy price uncertainty is a key risk. Markets are watching for potential fuel price hikes and their ripple effects on the economy. If there is resolution in the Strait, it could be a strong positive trigger for Indian equities, especially given that valuations have corrected significantly.

 

What could change your positive long-term view on India?

 

A decline in productivity growth. If reforms slow, efficiency declines, or productivity gains weaken, that would be a concern. But as long as India continues improving productivity—especially through technology—we remain constructive.

 

Within Asia, which markets do you prefer?

 

AI-linked markets stand out—particularly Taiwan and Korea. We also look at indirect beneficiaries, like commodity exporters, since AI demand drives needs for electricity and materials like copper.

 

What are the three key data points you’re tracking over the next 3–6 months that will shape your investment decisions?

 

The three most important factors would be earnings, interest rates and the inflation trajectory. Inflation is particularly critical, as it influences both rates and market dynamics.

 

As regards India, rank the following in order of most concerning to least: earnings not coming through, valuation woes, rupee under pressure, oil & its impact on the economy.

 

Crude oil prices remain the most concerning as they not only impact India but the entire world, especially Asia. The second will be rupee as it is an important factor for foreign investors. Valuation-wise we are okay after the fall seen in the last few months; and lastly the earnings as there are still some good investment opportunities in the markets, but one needs to be selective. If the energy situation improves, it would be a significant positive for both the global and Indian economy.