India has slipped from being fund managers’ most preferred Asian stock market to the least favored in just three months, according to a Bank of America Corporation survey.

The survey, which polled 99 panelists managing $183 billion in assets, found that 30% are now underweight on India, compared with 20% for Thailand and 10% for Malaysia. Japan emerged as the top pick, followed by China.

Trump’s 50% Tariff Proposal Dampens Investor Sentiment

The shift marks a significant reversal from May, when India had overtaken Japan as the most favored market due to its resilience during the initial tariff hikes. Analysts say the change reflects growing investor concerns after Trump doubled tariffs on Indian goods, citing penalties for the country’s purchases of Russian oil.

Friction Increases

The deterioration in sentiment comes amid weak earnings, stretched valuations, and trade uncertainty, the survey found. Global funds have withdrawn about $4 billion from Indian equities this quarter, though domestic institutional and retail investors have stepped in to buy.

Mutual funds focused on Indian stocks recorded net inflows of ₹427 billion in July, the highest on record, according to the Association of Mutual Funds in India.

Despite this domestic support, Indian equities suffered their longest weekly losing streak in five years last week, underperforming most major Asian peers in 2025.

The Nifty50 index has fallen over 2.1% in the past month, dragged by the Nifty IT index’s 8% decline. Other major indices, such as pharma and metals, also fell during the period.

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