Indian stocks registered their worst weekly losing streak since the onset of the Covid-19 pandemic last week, and have lagged major Asian peers this year
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HEMANSHI KAMANI

India has gone from fund managers’ top Asian stock market pick to their least preferred in just three months amid US President Donald Trump’s tariff escalation, according to a Bank of America Corp survey.

In the most recent fund manager survey, 30 per cent said they are underweight on India, followed by 20 per cent for Thailand and 10 per cent for Malaysia. Japan fared the best, with China taking the No 2 spot. A total of 99 panelists with $183 billion of assets responded to the survey’s regional questions.

That marks a sharp reversal from May’s survey, which showed India displacing Japan as the most favored market due to its perceived haven status during Trump’s initial tariff rollout. The change in sentiment for the $5.2 trillion equity market underscores growing investor concern about Trump’s decision to double levies on the South Asian country’s goods as a penalty for its purchases of Russian oil.

“India is affected by President Trump‘s announcement of 50 per cent tariffs,” strategists including Ritesh Samadhiya wrote in a August 12 note. That contrasts with other markets in the region including China, where the tone has “become more enthusiastic.”

Trade angst, weak earnings and expensive valuations have prompted global funds to withdraw about $4 billion from Indian shares this quarter, though domestic institutions and retail investors have ramped up purchases. The nation’s stocks-focused mutual funds, which get the bulk of their flows from individual traders, pulled in a record ₹42,700 crore ($4.9 billion) on a net basis in July, data from the Association of Mutual Funds in India (AMFI) showed.

Still, Indian stocks registered their worst weekly losing streak since the onset of the Covid-19 pandemic last week, and have lagged major Asian peers this year. Chinese shares outperformed their Indian counterparts by about eight percentage points in July — the most since February.

“Trump’s harsh tariffs and the straining of relations between US and India have impacted market sentiment,” said VK Vijayakumar, chief investment strategist at Geojit Investments. Tepid earnings growth and elevated valuations have “emboldened the bears to increase the short positions,” he said.

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Published on August 13, 2025