Sensex, Nifty: Global fund managers see India stocks falling, structural derating in China ahead

Sensex, Nifty, stock market: While Japan still stands as the top pick by global funds managers, India stays off the investors' radar, BofA Securities in its latest monthly fund manager survey suggested. India is not among top three Asian markets that global funds like. "India remains off the investors' radar with most participants seeing further decline in the equity markets," the foreign brokerage said. 

BofA Securities said more than 90 per cent of the participants in its survey anticipate Trump administration policies to have an adverse impact on Asia PAC ex-Japan economies. Investors, it said, remain concerned about impending tariffs. 

In his inaugural address, Trump made pledges like free speech, ownership of the Panama Canal, and a national emergency at the southern border. From an economic perspective he plans to direct the members of his Cabinet to tackle inflation and bring down costs, drill for more oil & gas and impose tariffs on foreign nations, JM Financial said.

"Broader markets still look pricey and the global and local macros look slightly less favourable. Our end-2025 Nifty 50 target of 25,500 implies 10 per cent upside potential from current levels (8 per cent for CY25). We prefer private sector banks, IT, telecom and consumer discretionary to staples, pharma, insurance and metals," said BNP Paribas India in its India Strategy report 2025.

BofA Securities said 34 per cent of participants in its FMS survey expects China to devalue its currency against dollar, 24 per cent see ramp-up of stimulus measures to spur growth, 22 per cent see negotiation while 20 per cent see tit-for-tat retaliation.  

China's case
In China, investor patience is being put to test yet again as the sharp rally in September fails to hold on to the gains. 

"Unsurprisingly, growth optimism faded further, with net 10 per cent expecting the economy to strengthen, down from net 61 per cent in October. Structural bearishness calls shot up to near survey-highs, while allocations nosedived to near survey-lows," BofA said.

FMS thinks that cash hoarding by Chinese households is here to stay, while less than 25 per cent are comfortable adding exposure on further signs of easing, the foreign brokerage said. In terms of stock market, four out of five participants see a structural derating in the China equity market.

"The bearishness on the economy rubbed off on return expectations with a majority expecting less than 5 per cent returns in the APAC ex-Japan equities in the next 12 months. Profit expectations have softened from a top quintile reading in October to align with LT average, while valuation assessments remain above their LT average," BofA said.

Favourite stock markets

The foreign brokerage said the optimism on Japan, remains unscathed, as FMS spells out even brighter prospects than before with 20 per cent of the participants expecting double-digits in the next 12 months. 

"Taiwan held on the second spot, followed by Korea.  Allocation to Korea rebounded after hitting survey-lows last month, helped by stabilisation after the political turmoil and improved outlook of the semiconductor cycle. India remains off the investors' radar with most participants seeing further decline in the equity markets," it said.