India Becomes Asia’s Least-Preferred Stock Market, Overtaking Indonesia: BofA Survey

India has overtaken Indonesia as Asia's least preferred stock market according to a Bank of America(BofA) survey, as per The Bloomberg report.  

The survey highlights concerns about India's lack of clear AI exposure and weak growth, with 32% of respondents net underweight on Indian equities. 

Concerns Over AI Exposure and Growth 

The survey indicates that the primary concern for Indian equities is the lack of a clear AI exposure. Weak growth is identified as the next most important risk factor. Additionally, the absence of reforms and high valuations contribute to the negative sentiment towards India's stock market. 

Comparative Sentiment for Indonesia 

In contrast, sentiment has improved for Indonesia, with 27% of fund managers net underweight on the market, compared to 32% in July 2026. Taiwan and Japan remain the most preferred regions for investors. 

Indian Stock Performance and Earnings 

Despite an improving earnings outlook, Indian stocks have declined over the past two weeks. Global funds have purchased over $4 billion in local stocks this quarter, the highest among regional emerging markets. Earnings for NSE Nifty 50 members increased by 18% from last year, surpassing estimates of 10% growth. 

Read More: India's Edible Oil Imports Fall 8% to 14.81 Lakh Tonnes in July 2026! 

Impact of Energy Costs and Market Performance 

Indian stocks were previously the least preferred in May 2026, due to growth pressures from rising energy costs following the US-Iran conflict. Energy prices are climbing again, affecting investor sentiment. The Nifty 50 has risen 8% from a March low but remains the second-worst performing major market in Asia this year, losing 8% overall. 

Indonesia's Market Rally 

Indonesia's improved sentiment is reflected in a more than 20% rally in the Jakarta Composite Index from a June 2026, low. This follows central bank measures to stabilise the currency and reduced fears of a downgrade to frontier-market status by MSCI Inc. 

Conclusion 

The Bank of America survey shows India as Asia's least preferred stock market, with 32% of respondents net underweight. Concerns include lack of AI exposure, weak growth, high valuations, and absence of reforms. Indonesia's sentiment improved with 27% net underweight, while Taiwan and Japan remain preferred. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or 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. 

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