May 15, 2025
Investor sentiment has shifted significantly, with net overweight positions on India rising from -13% in March to +42% in May
The country's resilience to tariff wars and its status as the fastest-growing large economy have played a pivotal role in this change
India’s diversified stock market and consistently premium valuations continue to attract investor interest
Government initiatives like the Production-Linked Incentive Scheme have bolstered manufacturing and export growth
According to the Bank of America’s May 2025 survey, India has become the top investment choice among Asia-Pacific fund managers. It has outpaced Japan, which now ranks second, while China lags in third place.
The accompanying data reveal a striking transformation in investor perception: in March 2025, fund managers were a net 13% underweight on India. Just two months later, that position had shifted dramatically, to a net 42% overweight. In investment terms, a net overweight position indicates that more managers allocate funds to India than those withdrawing from it.
This swift re-rating of India’s market position is underpinned by multiple factors. The Indian economy has demonstrated remarkable resilience in the face of global tariff disputes, making it one of the least affected large economies in the region. Its reputation as the fastest-growing major economy in the world continues to hold strong.
Moreover, India’s equity markets remain notably diversified compared to other Asia-Pacific peers. This structural advantage supports consistently premium valuations, reinforcing investor confidence.
Government-led initiatives have also played a critical role. Programmes such as the Production-Linked Incentive (PLI) Scheme have been instrumental in drawing global manufacturing investment into the country, boosting exports and expanding industrial capacity.
India’s emergence as a key player in the ‘China+1’ strategy, where companies seek to diversify their supply chains away from China, has added further momentum. According to the Bank of America survey, this positioning makes India a likely long-term beneficiary of evolving global supply chains.
However, the timing of the survey adds a note of caution. Conducted between 2 and 8 May 2025, it predates the announcement of a US-China trade ceasefire, which resulted in lowered tariffs between the two nations. This geopolitical development could trigger a short-term reassessment of China’s investment prospects, potentially leading to some capital rotation away from India.
Despite this, long-term trends appear robust. The broader movement toward supply chain diversification is expected to persist, positioning India as a sustained beneficiary in the regional investment landscape.
Source: Moneycontrol