India’s Stock Market Least Favored in Asia: BofA Survey
By Market Desk
A Bank of America survey shows India is now Asia’s least-preferred stock market, with 32% of fund managers underweight due to AI exposure concerns and weak growth.
India has been identified as Asia’s least-preferred stock market, according to a recent Bank of America Corp. (BofA) survey of fund managers. This position, previously held by Indonesia, reflects a growing caution among investors towards the Indian market, which stands among the poorest performers this year.
The survey, conducted between August 7 and August 13, polled 98 panelists managing $272 billion in assets. It revealed a significant portion of respondents held a net underweight position on India.
- India: 32% of respondents net underweight.
- Indonesia: Net underweight dropped to 27% from 32% in July.
Driving Factors for India’s Caution
Primary reasons for the bearish sentiment towards Indian equities include a perceived lack of clear exposure to artificial intelligence (AI) and ongoing concerns regarding weak growth. Investors also cite insufficient reforms and high market valuations as contributing factors.
Despite a strengthening earnings outlook for companies, Indian stock performance has declined over the past two weeks. The Nifty 50, for instance, saw earnings rise by 18% year-over-year in the most recent quarter, exceeding analyst estimates.
- Lack of clear AI exposure.
- Concerns over weak growth.
- Insufficient reforms.
- High market valuations.
Global funds have channeled over $4 billion into Indian stocks this quarter, making it the top recipient among regional emerging markets. However, the Nifty 50, while up 8% from its March low, has lost 8% this year, making it the second-worst performing major Asian market.
Indonesia’s Rebound and Favorable Markets
In contrast, sentiment for Indonesia’s stock market has improved significantly. This positive shift is attributed to central bank measures aimed at stabilizing its currency and reduced concerns about a potential downgrade by MSCI Inc. to frontier-market status.
Indonesia’s Jakarta Composite Index has rallied more than 20% since June. Meanwhile, Taiwan and Japan continue to be the most favored regions among investors in the BofA survey.
- Jakarta Composite Index: Rallied over 20% since June.
- Indonesia’s central bank: Implemented currency stabilization measures.
- MSCI Inc.: Reduced concerns about downgrade.
The Nifty 50 is currently on track to break a decade-long streak of annual gains. Rising energy costs, partly due to the unresolved US-Iran conflict, are again dampening investor sentiment, a factor that previously deemed Indian stocks least preferred in May.