India becomes Asia's least-preferred market, replaces Indonesia: BofA poll

India has replaced Indonesia as Asia’s least-preferred stock market in Bank of America Corp’s latest survey of fund managers, underscoring rising caution towards a market that is among the world’s worst performers this year. The survey said the absence of clear AI exposure remains the biggest concern for Indian equities, while weak growth has emerged as the next key risk, according to a Bloomberg report.  While Sensex has crashed 9.75%, Nifty is down 7.96 in 2026.

As many as 32% of respondents were net underweight on India. Lack of reforms and elevated valuations were also cited among the reasons for the bearish view on Asia’s fourth-largest equity market. In comparison, sentiment towards Indonesia improved, with 27% of fund managers saying they were net underweight on that market, down from 32% in July. Taiwan and Japan continued to be the most preferred markets among investors, the Bloomberg report said.

The survey covered 98 panellists overseeing assets worth $272 billion and was conducted between August 7 and August 13. The findings come at a time when Indian stocks have declined over the past two weeks despite an improving earnings outlook, suggesting investors remain cautious even as fundamentals strengthen. Bloomberg-compiled data showed global funds have bought more than $4 billion of local stocks this quarter, the highest among regional emerging markets, after record outflows in the first half of the year.

Earnings of benchmark NSE Nifty 50 companies rose 18% year-on-year in the latest three-month period, ahead of Motilal Oswal Financial Services Ltd.’s estimate of 10% growth. Indian stocks were last ranked the least preferred in the BofA poll in May, when the country was facing pressure on growth from higher energy costs after the US-Iran war triggered a rally in global crude oil prices. With no sign of progress towards resolving the conflict, energy prices are rising again, adding to pressure on investor sentiment.

Although the Nifty 50 has risen 8% from its recent March low, it remains the second-worst performing major market in Asia this year, with a loss of 8%. The index is also on track to snap a run of 10 straight years of annual gains. The improvement in sentiment towards Indonesia follows a rally of more than 20% in the Jakarta Composite Index from its June low, helped by the central bank’s steps to stabilise the currency and easing concerns over a downgrade to frontier-market status by MSCI Inc.