India has replaced Indonesia as Asia's least-preferred stock market among fund managers surveyed by Bank of America (BofA), with 32% of respondents reporting a net underweight position on Indian equities.

The poll results pointed to four principal concerns behind the cautious allocation stance: a lack of clear artificial intelligence (AI) exposure among Indian companies, weak economic growth, high equity valuations, and limited progress on reforms. The AI concern echoes a broader global pattern: BofA's own fund manager surveys have in recent years repeatedly identified long positions in AI-linked technology stocks as among the most crowded trades, making perceived access to the theme a meaningful input in country allocation decisions.

The negative assessment was not uniform, however. Respondents also identified offsetting factors, noting that corporate earnings are improving and that foreign inflows into Indian equities have resumed, providing some support to the market.

Bank of America's fund manager survey is a closely followed monthly poll of institutional investors that tracks allocation preferences across regions and asset classes. In such surveys, a "net underweight" reading means the share of fund managers holding a below-benchmark weight in a market exceeds the share holding an above-benchmark weight. Because the survey is a point-in-time gauge of sentiment rather than a forecast, positioning can shift between monthly editions; subsequent survey results, depository-published foreign flow figures, quarterly earnings, and government policy announcements are among the indicators market watchers track to judge whether an underweight stance persists.

Foreign portfolio investors have historically been a significant driver of flows into Indian equities, which trade on the National Stock Exchange (NSE) and BSE, with the Nifty 50 and the Sensex serving as the market's principal benchmark indices. India is also among the largest country weights in the MSCI Emerging Markets index, the benchmark many global emerging-market funds track, which makes swings in foreign allocation preferences consequential for Indian market flows. At the same time, the domestic investor base has grown into a substantial counterweight, as steady monthly contributions through systematic investment plans (SIPs) into equity mutual funds have helped absorb episodes of foreign selling in recent years.

The findings were reported by Economic Times Markets on August 19, 2026.