India Regains Investor Confidence, Becomes Asia’s Top Equity Market Pick

India has reclaimed its status as Asia’s most favoured stock market, marking a sharp turnaround from earlier this year when it was among the region’s least preferred investment destinations. The shift in sentiment is driven by global trade disruptions and supply chain realignments, which fund managers believe position India for long-term growth.

Indian Overtook Japan

According to Bank of America's latest fund manager survey, 42% of respondents now prefer Indian equities over other Asian markets, pushing it ahead of Japan (39%), China (6%), and Singapore (3%). The report highlights India as a primary beneficiary of the ongoing restructuring in global supply chains due to rising geopolitical tensions and tariffs.

This rebound is particularly noteworthy given that India was the second-least favoured market as recently as February. Now, it has overtaken Japan to lead the region in investor preference. In contrast, Japan — Asia's second-largest equity market — has lagged in performance, with the Nikkei 225 falling 4.4% year-to-date, while India’s Nifty50 has gained 4% during the same period.

China, which previously ranked at the bottom, has shown signs of renewed interest from investors, rising to third place. Meanwhile, Thailand and Taiwan continue to be the least attractive markets among fund managers.

Investment themes driving optimism in India include infrastructure development and growing domestic consumption. These sectors remain key focus areas for institutional investors as they look for stable growth opportunities in the region.

Fund Managers’ Favourite Sector

Across the Asia ex-Japan portfolios, fund managers continue to favour telecom and software sectors, while maintaining underweight positions in energy, materials, and consumer discretionary e-commerce. The semiconductor sector is also showing signs of recovery, with bearish sentiment easing — the share of managers expecting a downturn has declined to a net 42%, from 59% last month.

The survey also points to a broader improvement in outlook for Asia-Pacific markets. While 58% of fund managers still anticipate an earnings slowdown, the figure is down significantly from 78% in the previous month, suggesting rising confidence. Notably, current earnings estimates are not seen as overstretched, leaving room for positive revisions in the near future.

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Conclusion

India's resurgence as Asia’s most favoured equity market underscores the shifting dynamics in global investment strategies amid geopolitical uncertainty and supply chain recalibrations.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.