India’s Stock Market Ranks Fourth Among APAC Investors
India’s stock market has recently fallen to the fourth position among Asia Pacific’s most favored investment destinations, as revealed by a new survey from Bank of America (BofA) reported by The Economic Times. This decline marks a significant shift from India’s previous leadership status in the region. The benchmark Nifty index is currently experiencing a two-month consolidation phase, with no clear breakout in sight. Meanwhile, Japan has surged ahead in investor interest, followed by Taiwan and South Korea, as capital increasingly flows into semiconductor-driven markets.
Investor Sentiment Shifts
The BofA survey highlights a stark change in investor sentiment towards India, with only 10 percent of fund managers currently betting heavily on the Indian market. This figure is significantly lower compared to 32 percent favoring Japan, 19 percent supporting Taiwan, and 16 percent backing South Korea. The findings underscore India’s vulnerability as other markets benefit from a resurgence in the semiconductor sector. BofA noted that both Taiwan and South Korea are capitalizing on this revival, with South Korea also gaining from optimism surrounding its new leadership’s policy reforms.
The Indian IT services sector is facing notable challenges, with BofA’s India IT services indicator dropping to a 20-month low. This downturn adds to the uncertainty that is currently affecting the domestic market. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, pointed out that the lack of catalysts is keeping the market rangebound. He stated, “There are no triggers for the market to break out of the consolidation range in which it has been stuck for two months now.”
Potential Catalysts for Recovery
Despite the current challenges, Dr. Vijayakumar mentioned a potential upside that could trigger a market rally. He suggested that a tariff rate significantly below 20 percent, such as 15 percent, could surprise the market and lead to a positive shift. This potential development on the trade and tariff front is something investors should keep an eye on, as it may provide the necessary momentum for a breakout.
In light of the overall decline in rankings, analysts at Prabhudas Lilladher emphasized the resilience of the Indian market. They noted that Indian markets have shown considerable strength in recent months, despite facing significant global events such as tariff wars and geopolitical tensions. However, foreign institutional investors (FIIs) have remained net sellers year-to-date, although there has been a recent shift to net buying, indicating a cautious approach from foreign investors.
Sectoral Trends and Future Outlook
The BofA survey also revealed a growing interest among investors in consumption and infrastructure-related sectors within Indian equities, even as the IT services sector continues to face pressure. This trend reflects broader global concerns surrounding the technology sector. As the Indian market navigates these challenges, the focus on consumption and infrastructure could provide a pathway for recovery and growth.
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