India Replaces Indonesia As Asia’s Least-Preferred Stock Market, Finds Survey; Know Why

India has replaced Indonesia as Asia’s least-preferred stock market among fund managers, according to the latest Bank of America Corp. (BofA) survey, underscoring growing caution toward Indian equities despite stronger corporate earnings and a return of foreign investment. About 32 per cent of respondents were net underweight on India, making it the least-favoured market in the region.

AI Exposure, Growth Among Key Concerns

The lack of clear exposure to the artificial intelligence investment boom emerged as the biggest concern for investors, followed by weak economic growth. High valuations and concerns over the pace of reforms also contributed to the bearish view of Indian equities. Stocks To Buy or Sell Today, August 19, 2026: LIC, Tata Capital and Birlasoft Among Shares That May Remain in Focus on Wednesday.

The survey covered 98 fund managers overseeing USD 272 billion in assets. Responses were collected between August 7 and August 13. Taiwan and Japan remained the most preferred markets among respondents, while sentiment toward Indonesia improved.

Indonesia Moves Ahead of India

Indonesia, which had previously occupied the bottom position in the regional rankings, saw its standing improve. Around 27 per cent of fund managers were net underweight on Indonesian equities, down from 32 per cent in July. State Bank of India Stock Update: Shares Dip Amid Recruitment Woes, RBI Policy Shift.

The shift comes after a strong rebound in Indonesian stocks. The benchmark Jakarta Composite Index has gained more than 20 per cent from its June low, helped by measures from the central bank to stabilise the currency and easing concerns that MSCI Inc. could downgrade Indonesia to frontier-market status.

Indian Stocks Remain Under Pressure

The survey comes despite signs of improvement in India’s corporate earnings and foreign investor flows. Global funds have bought more than USD 4 billion of Indian equities this quarter, the highest amount among regional emerging markets, according to Bloomberg data. The purchases follow record foreign outflows during the first half of the year.

Corporate earnings have also been stronger than expected. Earnings for companies in the benchmark Nifty 50 rose 18 per cent from a year earlier during the latest three-month period, compared with Motilal Oswal Financial Services Ltd.’s earlier estimate of 10 per cent growth. The improvement in earnings, however, has not translated into a sustained improvement in investor sentiment.

Nifty Faces a Difficult Year

The Nifty 50 has recovered about 8 per cent from its March low but remains down roughly 8 per cent for the year, making it the second-worst-performing major Asian market, according to Bloomberg.

If the decline persists through the end of the year, the index would break a historic streak of 10 consecutive years of annual gains. The latest BofA ranking is also not the first sign of investor caution toward India this year. Indian stocks were ranked the least-preferred Asian market in the bank’s May survey, when higher energy costs were adding pressure to the country’s growth outlook.

Energy Prices Add to Investor Concerns

Energy prices remain another source of uncertainty for Indian equities. Oil prices had surged following the US-Iran conflict, increasing concerns over India’s import bill and economic growth. With no clear resolution to the conflict, renewed strength in energy prices could continue to weigh on investor sentiment.

The latest survey therefore highlights a gap between improving corporate fundamentals and investor positioning. While earnings have strengthened and foreign funds have returned to Indian shares, fund managers remain concerned about valuations, growth, reforms and the country’s limited participation in the AI-led investment cycle.

For now, those concerns have left India at the bottom of the regional preference rankings, while Indonesia’s improving market performance and easing macroeconomic risks have helped it move ahead.

(The above story first appeared on LatestLY on Aug 19, 2026 03:24 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).