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Sarfaraz said Pakistan had made too many mistakes of their own in a match where they were dismissed for 266 in 45.4 overs.
They now have three points from four games, with two defeats, one win - a surprise success over tournament hosts and favourites England - and a no-result.
"We committed more mistakes than Australia," said Sarfaraz. "We won a good toss but didn't bowl well in the first 30 overs."
Sarfaraz added a rapid collapse that saw three wickets lost for 11 runs as Pakistan slumped to 147-5 had also proved costly.
"I think losing three wickets in the space of 15 balls was the turning point.
"Babar (Azam, who made 30 including seven fours) was playing well and his was a soft dismissal."
Mohammad Hafeez also fell when well set, for 46, when he hit a Finch full toss straight to deep square leg.
"The ball which Mohammad Hafeez got out to was a loose one - it should have gone over the fence," said Sarfaraz.
"We have to overcome our mistakes because India are also a very strong team. We will assess our performance and then we will plan."
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