India becomes Asia’s least-preferred stock market in BofA survey

India has replaced Indonesia as Asia's least-preferred stock market in a Bank of America survey of 98 fund managers managing $272 billion in assets, with 32% of respondents net underweight on Indian equities. The survey, conducted between August 7 and August 13, cited a lack of clear AI exposure as the top concern, followed by weak economic growth, elevated valuations, and a perceived lack of reforms.

The BofA survey found that investor sentiment towards Indonesia improved, with 27% of fund managers net underweight, down from 32% in July. Taiwan and Japan remained the most preferred markets. The findings come despite Indian corporate earnings improving, with Nifty 50 earnings rising 18% year-on-year, ahead of Motilal Oswal's estimate of 10% growth, and global funds buying over $4 billion of Indian stocks this quarter after record outflows in the first half.

The Nifty 50 has recovered 8% from its March low but remains down 8% for the year, on track to end a 10-year streak of annual gains. Rising crude oil prices linked to the US-Iran conflict are adding to investor caution. The survey results signal a disconnect between improving fundamentals and persistent concerns over valuations and global themes.