India's Equity Market Loses Favor with Global Fund Managers; China Regains Ground Amidst Rising Interest in AI Sector

India's equity markets have become less favored among global fund managers, now ranking as the second-least preferred market in Asia, according to a Bank of America survey conducted among 205 fund managers handling $482 billion in assets. The survey indicated that 19% of respondents were underweight on Indian equities, a significant increase from 10% in January. Japan remains the most preferred market, followed by Taiwan.

China has rebounded to become the third-most preferred market, driven by rising interest in the AI sector and stabilized economic sentiment. This shift suggests improved sentiment towards Asia-Pacific markets, excluding Japan, with 84% of fund managers expecting regional equities to trend higher over the next year.

Meanwhile, Indian investors are increasingly turning to passive investing through Index Funds and Exchange-Traded Funds (ETFs). ETFs are traded like shares and can be sold or purchased at existing market prices during the day. While both have similar objectives, ETFs are generally more cost-effective than Index Funds due to their passive investment strategy and reduced operational expenses.