New Delhi: India’s stock market now has a problem that goes beyond falling share prices. The country is now the least preferred stock market in Asia, with investors increasingly questioning where it fits into the next big technology boom.
According to a Bank of America survey of fund managers, India is among the world’s worst performers this year, with the lack of listed companies offering clear exposure to artificial intelligence emerging as the biggest concern.
The survey, conducted between 7 and 13 August, found that 32 per cent of fund managers were net underweight on Indian stocks. Weak economic growth was the second big concern, followed by a lack of policy reforms to improve the business environment and high stock valuations. The survey received responses from 98 fund managers overseeing $272 billion in assets.
Investor sentiment toward Indonesia, meanwhile, has improved. The share of fund managers who were net underweight on Indonesian equities fell to 27 per cent from 32 per cent in July. Taiwan and Japan continued to be the most preferred markets.
Structural concern
The findings align with a decline in Indian stocks over the past two weeks, despite an improving earnings outlook. Global funds have bought more than $4 billion worth of Indian stocks this quarter, the highest inflow among regional emerging markets, after record outflows in the first half of the year.
Earnings of companies in the benchmark NSE Nifty 50 rose 18 per cent from last year in the latest three-month period, exceeding Motilal Oswal Financial Services’ estimate of 10 per cent growth.
The Nifty 50 has recovered about 8 per cent from its recent low in March, but is still down around 8 per cent for the year. That makes it the second-worst-performing major market in Asia and puts it on course to break a 10-year streak of annual gains.
India was previously ranked the least preferred Asian market in the May 2026 survey by Bank of America. At the time, rising energy prices had heightened concerns about the country’s growth prospects following the US-Iran war, which triggered a surge in global crude oil prices. Those concerns are returning as energy prices rise again, with no clear resolution to the conflict.
The latest survey also points to a structural concern. While Indian technology companies have long played a major role in global IT services, investors are concerned that there are not enough listed Indian companies with a strong presence in the AI sector.
Indonesia’s improved standing follows a more than 20 per cent rally in its benchmark Jakarta Composite Index from its June low. Measures by Indonesia’s central bank to stabilise the currency, along with fading concerns about a possible downgrade to frontier-market status by MSCI, have helped revive investor confidence.
(Edited by Prasanna Bachchhav)
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