INDIA has replaced Japan as fund managers’ top Asian stock market pick, as the South Asian nation is likely to benefit from supply chain shifts amid global trade tensions, according to BofA Securities’ latest monthly survey.
In the fund manager survey, 42% said they are overweight on India, followed by 39% for Japan, and 6% for China. Thailand fared the worst. A total of 109 panelists with $234 billion of assets responded to the survey’s regional questions.
“India emerges as the most favored market, perceived as a likely beneficiary of the supply chain re-alignments following the effects of tariffs,” strategists including Ritesh Samadhiya wrote in a May 13 note. “In India, infrastructure and consumption continue to be the primary themes that investors are keenly monitoring.”
The findings support recent market trends in India, where stocks have rebounded since President Donald Trump’s chaotic tariff rollout on April 2. The tariff-driven volatility in global markets has driven investors to deem India as a relative haven given its heavier dependence on domestic consumption over exports.
India’s stock benchmark, the Nifty 50 Index, has outperformed many of their Asian peers, with only Japan and Indonesia exceeding its performance since April 2.
The Indian market has been pressured recently by a conflict with neighbor Pakistan, following an April 22 attack in Kashmir that killed 26 civilians. The countries agreed to a ceasefire on May 10, triggering a spike in their equity markets when the market opened this week.
Indian companies’ first-quarter earnings are also pointing to an improved outlook. Local stocks may rise another 7.6% from the current level by the end of the year, and analysts will largely cease downgrading their earnings, Sanford C. Bernstein strategist Venugopal Garre said in a report.
“We believe the markets are positioned well,” Garre said, citing improved liquidity, tax cuts and rural demand among the drivers. –BLOOMBERG
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