India replaces Indonesia as Asia's least-preferred stock market: BofA survey

Survey Finds India at the Bottom of Asian Market Preferences

India has replaced Indonesia as Asia's least-preferred stock market among global fund managers, according to Bank of America's August 2026 survey. The monthly survey, which drew responses from 98 panellists managing $272 billion in assets between August 7 and 13, found that 32% of respondents were net underweight on Indian stocks.

The report highlights that the absence of listed companies with clear exposure to artificial intelligence is the biggest concern for investors, followed by weak economic growth, a lack of policy reforms, and elevated valuations. These factors have contributed to a bearish view on Asia's fourth-largest equity market, as reported by The New Indian Express and ThePrint.

Indonesia's Sentiment Improves

In contrast, investor sentiment towards Indonesia has improved. The proportion of fund managers net underweight on Indonesian equities fell to 27% from 32% in July. ThePrint notes that Indonesia's Jakarta Composite Index has rallied more than 20% from its June low, while central bank measures to stabilise the currency and easing concerns about a possible MSCI downgrade have helped revive confidence.

Taiwan and Japan remained the most preferred markets in the survey, according to a Bloomberg report cited by The New Indian Express.

Market Performance Divergence

The survey's findings align with recent market movements. Taiwan and Korean equity benchmarks are up more than 50% each in 2026, while Japan has surged more than 26%. India's Nifty, meanwhile, is down nearly 8% for the year, having recovered about 8% from its March low, as reported by ThePrint.

Foreign institutional investors have been net sellers of about Rs 2.40 lakh crore of Indian equities in 2026, following offloading of Rs 1.66 lakh crore in 2025, according to The New Indian Express. This selling pressure, coupled with rising crude oil prices, has pushed the rupee to an all-time low against the US dollar.

Earnings Outlook vs. Market Sentiment

Despite the bearish sentiment, ThePrint reports that global funds bought more than $4 billion worth of Indian stocks this quarter, the highest inflow among regional emerging markets. Additionally, Nifty 50 earnings rose 18% in the latest quarter, exceeding Motilal Oswal Financial Services' estimate of 10% growth.

The local market shed 2-3% in each of the past two weeks after a brief recovery in July, as noted by The New Indian Express. This was not the first time India has ranked at the bottom; it was also the least preferred Asian market in the May 2026 survey, when rising crude prices due to the US-Iran war heightened concerns.