According to a recent survey by Bank of America Corp., India has now been identified as Asia’s least-preferred stock market among fund managers, surpassing Indonesia. This shift reflects a growing wariness towards India’s market, which has struggled significantly this year, ranking among the poorest performers globally. Investors are increasingly cautious, indicating a broader trend of hesitance towards Indian equities.
The lack of a clear AI exposure remains the key concern for Indian equities, with weak growth emerging as the next most important risk, according to a survey.
Lack of reforms and high valuations also emerged as reasons for the bearish outlook on Asia’s fourth-largest equity market. The survey findings align with a decline in Indian stocks over the past two weeks despite an improving earnings outlook, suggesting investors remain wary of the market even as its fundamentals strengthen. Indian stocks were last termed the least preferred in the BofA poll in May, as the country faced pressure on growth from rising energy costs following the US-Iran war that triggered a rally in global crude oil prices. With no sign of progress toward resolving the conflict, energy prices are climbing again, weighing on investor sentiment.
The lack of a clear AI exposure remains the key concern for Indian equities, with weak growth emerging as the next most important risk, according to the survey, which showed 32 per cent of the respondents were net underweight on the nation. Global funds have purchased more than $4 billion in local stocks this quarter – the most among regional emerging markets – after record outflows in first half of the year, data compiled by Bloomberg show. Earnings for benchmark NSE Nifty 50 members jumped 18 per cent from last year in the most recent three-month period, ahead of Motilal Oswal Financial Services Ltd.’s estimate of 10 per cent growth. Meanwhile, the improvement in sentiment for Indonesia reflects the more than 20 per cent rally in the benchmark Jakarta Composite Index from a June low, following the central bank’s measures to stabilise the currency and fading fears of a downgrade to frontier-market status by MSCI Inc.
