August 20, 2026: India’s position among global fund managers took a sharp hit in the latest Bank of America (BofA) Asia Fund Manager Survey, with the country emerging as the region’s least-preferred equity market.
Author: Aadarsh Patel | EQMint
The shift reflects growing concerns around trade tensions, corporate earnings and elevated valuations. The survey showed 30% of fund managers were underweight on Indian equities, the highest negative allocation among the Asian markets covered.
India Falls From Top Pick to Least Preferred
The change is striking because India had been the most-preferred Asian market just 3 months earlier.
In May, investors had favoured Indian equities amid expectations around domestic growth, infrastructure spending and India’s potential role in global supply-chain diversification. By August, sentiment had reversed sharply.
The Bank of America survey covered 99 fund managers managing around $183 billion in assets across the regional questions.
India recorded a 30% underweight position, followed by Thailand at 20% and Malaysia at 10%. Japan remained the preferred Asian market, while China moved into second place.
Tariffs Put Pressure on Investor Sentiment
One of the biggest factors behind the change has been the escalation in US-India trade tensions.
The survey came after the US announced higher tariffs on Indian goods, adding pressure to investor sentiment around Indian equities. Bank of America strategists said the tariff announcement was affecting India’s investment outlook.
The concern comes alongside questions around the pace of corporate earnings growth.
Indian equities have also been trading at relatively high valuations compared with several regional markets, making investors more sensitive to any deterioration in earnings expectations or macroeconomic conditions.
Foreign Investors Have Become More Cautious
The shift in Bank of America survey reflects a broader change in foreign investor positioning.
Foreign funds had been reducing their exposure to Indian equities, while domestic institutions and retail investors continued to provide support to the market. Bloomberg reported that global funds had withdrawn around $4 billion from Indian shares during the quarter covered by the August 2025 reporting.
Data cited by the report also showed strong domestic mutual-fund inflows, creating a contrast between overseas and domestic investor behaviour.
That split has become an important feature of India’s equity market. Domestic liquidity has helped absorb part of the selling pressure from foreign investors.
China Gains Investor Attention
While sentiment toward India weakened, China moved higher in the regional preference ranking.
Fund managers became more positive about China’s growth outlook, with expectations of additional policy support helping improve sentiment. Japan remained the region’s favourite market, supported by corporate reforms and its earnings outlook.
Across Asia ex-Japan, fund managers showed stronger interest in technology hardware, semiconductors, software and financial services. Materials, automobiles, energy and real estate attracted less interest.
What This Means for Indian Equities on Bank of America
The Bank of America survey is a measure of investor sentiment, rather than a direct forecast that Indian stocks will fall.
India continues to have a large domestic investor base, and domestic institutions can provide support when foreign investors reduce exposure. The market’s longer-term direction will depend on earnings growth, valuations, economic activity and the evolution of global trade relations.
For investors, the latest survey signals that foreign portfolio sentiment toward India had become considerably more cautious at the time of the survey.
The change also shows how quickly market preferences can shift. India moved from the top of the Asian preference table to the bottom within a 3-month period.
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