India has emerged as Asia’s least-preferred stock market among global fund managers, according to the August survey by Bank of America, reflecting growing concerns over valuations, economic growth and the pace of reforms.

The survey covered 98 fund managers overseeing $272 billion, with 32% reporting that they were net underweight on Indian equities.

High valuations weigh on sentiment

According to the survey, several factors are contributing to the cautious outlook towards Indian stocks. These include high valuations, weak growth, limited exposure to artificial intelligence and slow progress on reforms.

The concerns come at a challenging time for the Indian equity market, with the Nifty 50 down 7.9% in 2026, according to the information shared in the report.

The cautious stance among global investors indicates that India’s strong long-term growth story is currently being weighed against concerns over whether stock valuations adequately reflect the expected earnings and economic performance.

Foreign investors remain cautious

Foreign investors have also continued to sell Indian equities, adding pressure to the market and contributing to concerns over the near-term outlook.

The survey results highlight a shift in investor sentiment as global fund managers reassess their exposure to Asian markets.

India has traditionally attracted significant foreign investment because of its large domestic market and growth potential. However, the latest survey suggests that investors are currently looking for stronger growth prospects and more attractive valuations elsewhere in the region.

What investors will watch next

The outlook could depend on whether India can address concerns surrounding growth, valuations and reforms while strengthening its participation in emerging technology sectors such as artificial intelligence.

For investors, the latest survey serves as a reminder that market confidence can change even when the broader long-term economic outlook remains positive.

The coming months will therefore be closely watched for signs of stronger growth, policy momentum and a revival in foreign investor interest