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Benchmark indices in India have been under pressure since the start of 2025 as an exodus of foreign investors and muted earnings growth have dragged the Nifty 50 to the lowest level in eight months.
The Nifty 50 is down 13% from its record high of 26,277, which it had hit on September 27 last year.
According to the Bank of America survey, 19% of fund managers are underweight on Indian equities from a 12-month perspective, up from the 10% mark in January.
While Japan continues to hold the top spot, driven by a record-high economic and market outlook, Taiwan ranks as a distant second. “Allocations to China rebounded after falling sharply last month, while support for Indian equities, an erstwhile market favorite, continues to dwindle with allocations collapsing to a two-year low,” BofA Securities wrote in its report.
Interestingly, China, which was ranked as the least-favoured market in its January fund managers’ survey, has made a significant leap this time. According to the survey, China is now the third-most favoured market in Asia, trailing only Japan and Taiwan.
The brokerage further noted that when it comes to China, the sentiment is one of guarded optimism. While investors remain cautious about the economy, they are gradually becoming more open to risks, with AI emerging as the most preferred sector. Further, the growth outlook has stabilized after reaching two-year lows, with fund managers seeing potential upside in regional equities, along with scope for re-rating and EPS upgrades.
According to the research house, fund managers’ assessment of Asia-Pacific markets (excluding Japan) has improved, with 84% expecting higher levels in regional equity markets over the next 12 months. As a result, they no longer view regional equities as overvalued or consider consensus EPS estimates too high, indicating room for potential upgrades.
A total of 205 panellists, managing $482 billion in assets, participated in the survey. Of these, 168 panellists with $401 billion in AUM responded to the global FMS questions, while 110 panellists with $199 billion in AUM addressed the regional FMS questions.