New Delhi: India has emerged as the least-favoured stock market in Asia among global fund managers, replacing Indonesia, according to the latest Bank of America (BofA) survey, signalling growing caution over Indian equities despite an improving earnings outlook.
The survey, conducted among 98 fund managers overseeing a combined $272 billion in assets, found that 32% of respondents were net underweight in India. The responses were collected between August 7 and August 13.
According to the survey, the lack of clear exposure to artificial intelligence emerged as the biggest concern surrounding Indian equities, followed by weak economic growth. Fund managers also cited limited reforms and elevated valuations as key reasons for their cautious stance.
The findings come despite Indian equities witnessing strong foreign inflows in the current quarter. Global investors have purchased more than $4 billion worth of Indian stocks so far this quarter, the highest inflow among emerging markets in the region, according to Bloomberg-compiled data.
Corporate earnings have also shown resilience. Earnings of companies in the benchmark NSE Nifty 50 rose 18% YoY during the latest three-month period, significantly exceeding the 10% growth projected by Motilal Oswal Financial Services.
However, the Nifty 50 remains among Asia’s weakest-performing major indices this year, declining around 8%. The index has also faced pressure from rising energy costs amid renewed concerns over the US-Iran conflict and elevated global crude prices.
Meanwhile, investor sentiment towards Indonesia has improved, with its benchmark Jakarta Composite Index gaining more than 20% from its June low. Taiwan and Japan continued to remain the preferred Asian markets among investors.
