"It's really a dream come true to be asked to captain your country," Watson said.
After Michael Clarke was ruled out of the ongoing Test with a back spasm, Watson became the 44th Test captain of Australia.
"It's obviously very disappointing that Michael hasn't come up, his batting and leadership will certainly be sorely missed, but I'm looking forward to the challenge and responsibility over the next five days," Watson told ESPN cricinfo.
"I mentally started preparing from there knowing I could have the opportunity," the 32-year-old added.
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Watson was amongst the four Australian players who were axed for the third Test in Mohali on disciplinary grounds and he then flew back to back home for the birth of his son.
"It has been a very up and down week emotionally. To be stood down from a Test match hit me very hard and it's been a great process over the week to get back into the team and contribute again.