India Slips from Asia’s Most Favoured to Least Preferred Market in Just Three Months, BofA Survey Shows

India’s stock market sentiment among global fund managers has plummeted over the last quarter, slipping from the most favoured in Asia to the least preferred. This sharp turnaround stems from growing concerns about U.S. tariff actions, data released by a Bank of America (BofA) Fund Manager Survey indicates.

In the latest regional survey, 30% of fund managers said they are underweight on India—the highest among Asian peers—surpassing Thailand (20%) and Malaysia (10%). In contrast, fund managers now favour Japan the most, followed by China in second place.

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This dramatic shift reverses May’s outlook, when India had displaced Japan as the top stock market pick in Asia. That optimism back then was driven by expectations that India would benefit from global supply-chain realignments amidst early tariff discussions. In the May survey, India was the clear favourite among fund managers, supported by strong domestic consumption, infrastructure growth, and anticipated supply-chain benefits.

Now, with the outlook reversed, the report underscores a growing investor unease triggered by the U.S. decision to impose steep tariffs on Indian goods. The 50% duty, announced on August 12, penalises India for continuing to purchase Russian oil, intensifying pressure on the country’s equity markets.

The survey was conducted among 99 panellists managing assets totalling $183 billion, who responded to regional Asia-Pacific questions. Their collective view now overwhelmingly disfavors India.

The consequences of this decline in investor confidence are significant. The shift in preference toward other markets like Japan and China suggests Indian equities may face continued capital outflows. Without fresh positive catalysts such as improved corporate earnings or easing trade tensions, the downward momentum could persist.

Despite the stark turnaround, there may still be opportunities ahead. Valuations in Asia remain varied, and improvements in external trade dynamics or policy clarity in India could potentially restore investor interest—but as of now, sentiment has notably soured.

Conclusion

In just three months, India’s standing among fund managers has dropped from Asia’s favourite to the least preferred market. This reversal reflects mounting worries over U.S. tariffs and underscores how rapidly investor sentiment can shift amid geopolitical uncertainty.