India Falls from Grace: BofA Survey Puts Indian Markets at Bottom in Asia

1. Headline Reality Check

A recent Bank of America Fund Manager Survey reveals that India has dropped to the least preferred Asian stock market in just a few months. In this latest poll, 30% of fund managers said they are underweight on India, making it the lowest-ranked market among Asia-Pacific equities.

2. What Changed So Quickly?

India’s decline is attributed to several bullish-to-bearish shifts:
- US tariff escalations have created macroeconomic uncertainty.
- Weak corporate earnings and high market valuations are discouraging.
- Also, the strong performance and demand for semiconductors in markets like Taiwan, South Korea, Japan, and China have drawn investor attention away from India.

3. Context: A Swift Reversal

This is a rapid turnaround compared to the May 2025 survey, where India was actually the most preferred equity market in Asia-Pacific:
- Net 42% of fund managers were overweight on India, ahead of Japan (39%) and far ahead of China (6%).
The shift from most-favored to least-favored within three months signals deep-seated changes in investor sentiment.

Impact on the Indian Market: Key Implications

Implication	Details
Foreign Capital Outflow	With fund managers underweight, we may see reduced foreign investment.
Sectoral Shifts	Sectors like IT and exports may face pressure; domestic sectors could benefit from local equity flows.
Elevated Volatility	Risk-averse sentiment may lead to wider swings in indices and stock valuations.
Policy & Corporate Adaptations	Stimulus, reforms, or trade relief may be required to win back investors.
Longer-Term Resilience Potential	Fundamentals like demographics and consumption growth can still support long-term optimism.

Final Thoughts

India’s slide to the least-favored rank among Asian markets—a dramatic fall within just a few months—is a warning sign of investor caution. While near-term pain may continue through reduced foreign flows and sentiment-driven volatility, the story’s not over. If macro conditions improve or reforms are introduced, India can regain its foothold as a top regional investment choice.

This content is for educational and knowledge purposes only and should not be considered as investment or Trading advice. Please consult a certified financial advisor before making any investment or Trading decisions.

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Our Recent FAQS

Frequently Asked Question &
Answers Here

Q1: Why did investors lose confidence in Indian equities so quickly?

Rising US tariffs, sluggish earnings growth, and overvalued markets have made India less attractive. In contrast, countries riding the semiconductor cycle (like Taiwan and Korea) are favored.

Q2: How significant is being “underweight”?

Underweight” implies fund managers reduce exposure to a market compared to a benchmark. At 30% underweight, India now trails all other Asia-Pacific markets in appeal

Q3: Does this mean Indian stocks will crash?

Not necessarily. Fundamentals can still be solid—domestic demand, infrastructure growth, and consumption remain strong themes. However, near-term sentiment is poor, so caution is warranted.

Q4: Can sentiment rebound soon?

Possibly. If there's improvement in earnings, easing tariff pressure, or renewed investor interest, India could attract inflows again. But in the short term, volatility may persist