India becomes Asia's least-favoured market

Bank of America's August 2026 survey of 98 fund managers managing $272 billion in assets found that 32% were net underweight on Indian equities, making India Asia's least-favoured stock market, replacing Indonesia. The survey, conducted between August 7 and 13, cited India's limited exposure to the artificial intelligence investment theme as the biggest concern, followed by weak economic growth, high valuations, and lack of reforms. In contrast, sentiment toward Indonesia improved, with net underweight falling to 27% from 32% in July, helped by a more than 20% rally in the Shanghai Stock Exchange Composite Index from its June low and central bank measures to stabilize the currency. Taiwan and Japan remained the most preferred markets. Despite the cautious stance, global investors bought over $4 billion of Indian stocks this quarter, and Nifty 50 earnings grew 18% year-on-year, beating estimates. However, the Nifty 50 is down about 8% this year, the second-worst performing major Asian market, and risks ending a 10-year streak of annual gains. Rising energy prices, linked to the unresolved US-Iran conflict, add further pressure.