Indian Stock Market: The shine of the Indian stock market seems to be fading. In fact, in a survey, India has been considered one of the top three least favorite Asian stock markets. According to research and survey by BofA Securities, 10 percent of fund managers have underweighted Indian equities from a 12-month perspective.
BofA Securities said in its survey that large-scale global fund managers expect less than 5 percent returns from Japan’s stock market in Asia markets in the next one year.
BofA said 182 panelists with assets under management (AUM) valued at $513 billion responded to questions from the Global Fund Manager Survey (FMS). While 111 panelists with AUM valued at $214 billion answered questions related to the Regional FMS between January 10 and 16.
According to the survey, only China (with a net 23 per cent of fund managers) and Thailand (13 per cent) are the other two Asian markets where fund managers are more underweight than Indian equities.
BofA Securities said that the patience of investors in China is once again being tested. This is because the sharp rally in September failed to sustain the gains.
The brokerage house said, “Surprisingly, growth expectations faded even further. “10 percent of managers expect the economy to strengthen, which is down from 61 percent of managers in October.”
On the other hand, in the survey, Japan was considered the most preferred market among Asian markets. A total of 53 per cent of partners/fund managers were highly attractive. This was followed by Taiwan (20) and South Korea (3).
BofA said, “Optimism about Japan remains intact. “20 percent of the participants surveyed by BofA expect double-digit returns from equities in the next 12 months.”
BNP Paribas Securities also considers 2025 to be a cold year for the Indian equity market. He has predicted that the returns of the Indian market will be in single digits in the next one year. At the same time, high frequency indicators in India are showing signs of a decline. While analysts at BNP Paribas Securities see other headwinds (high food inflation, high US bond returns, rising dollar index and strength in commodity prices) that could weigh on market sentiment for investors for much of the year.
Kunal Vora, head of India equity research at BNP Paribas India, wrote in a recent note, “Until there are signs of a strong revival in growth, demand for buying expensive equities in emerging markets will remain low. “Strong domestic inflows are supporting the Indian equity market and we do not see any major risks to it.”
“We see little possibility of re-rating of valuation multiples in 2025 and expect market returns to come back on track or earnings to moderate slightly,” he said.