India replaces Indonesia as Asia's least-preferred stock market: BofA survey

Key points

• India has replaced Indonesia as Asia's least-preferred stock market among global fund managers, according to Bank of America's (BofA) August…
• In 2026 so far, Taiwan and Korean equity benchmarks are up more than 50% each while Japan has surged more…
• A total of 98 panellists, managing $272 billion in assets, responded to the survey’s questions between August 7 and August…
• FIIs, meanwhile, are net sellers of about Rs 2.40 lakh crore of Indian equities in 2026.

India has replaced Indonesia as Asia’s least-preferred stock market among global fund managers, according to Bank of America’s (BofA) August 2026 survey. While weak expansion has emerged as the next key risk, the survey stated the absence of clear AI exposure remains the biggest concern for Indian equities.

The pessimism among global investors regarding the Indian market comes as foreign institutional investors (FIIs) continue to dump locally listed shares amid a enormous underperformance of benchmark indices – BSE Sensex and NSE Nifty – compared to major global indices. 

According to the Bank of America survey, 32% of respondents were net underweight in India. They also cited lack of reforms and elevated valuations as among notable reasons for the bearish view on Asia’s fourth-largest equity market. 

In comparison, sentiment towards Indonesia improved, with 27% of fund managers saying they were net underweight on that market, down from 32% in July. Taiwan and Japan continued to be the most preferred markets among investors, according to a Bloomberg report.

What happened

In 2026 so far, Taiwan and Korean equity benchmarks are up more than 50% each while Japan has surged more than 26%. 30%. India’s Nifty meanwhile, is down nearly 8%.

FIIs, meanwhile, are net sellers of about Rs 2.40 lakh crore of Indian equities in 2026. This record selling comes after they offloaded Rs 1.66 lakh crore in 2025. The massive FII exodus, coupled with a rise in crude oil prices, has pushed the Indian rupee (INR) to an all-time low value against the US dollar, making it one of Asia’s worst-performing currencies. 

A total of 98 panellists, managing $272 billion in assets, responded to the survey’s questions between August 7 and August 13, according to Bloomberg. The survey findings align with the decline in Indian stocks over the past two weeks despite an improving earnings outlook, suggesting investors remain wary of the market even as its fundamentals strengthen.

After a brief recovery in July, has again come under pressure with the benchmarks shedding 2-3% each previously two weeks.  , the local market.

The details

Indian stocks were last termed the least preferred in the Bank of America survey in May when a sharp rise in crude oil prices due to the US-Iran war had put pressure on the economic outlook. With tension still remaining high in West Asia and energy prices remaining firm, investors have turned cautious on Indian equities.