India’s standing in the eyes of global investors has taken a sharp downturn, slipping from the most favored Asian stock market in May to the least attractive by August, according to the latest Bank of America Corp. survey. This dramatic shift comes amid escalating trade tensions fueled by US President Donald Trump’s recent tariff hikes.
The survey revealed that 30% of global fund managers are now underweight on India, marking the highest bearish sentiment toward any Asian market. Thailand followed with 20% underweight positions, and Malaysia with 10%. Japan emerged as the top choice for investors, with China taking second place. The findings are based on responses from 99 fund managers overseeing a combined $183 billion.
Trump’s move to double tariffs on Indian imports to 50%—a step linked to New Delhi’s continued purchase of Russian oil—has been a major blow. “India is impacted by President Trump’s decision to impose 50% tariffs,” noted Bank of America strategists, including Ritesh Samadhiy, in a report dated August 12.
While investor confidence in China has shown signs of recovery, India has been weighed down by concerns over global trade disputes, subdued corporate earnings, and high stock valuations. As a result, foreign investors have withdrawn nearly $4 billion from Indian equities this quarter alone.
However, domestic players have helped limit the damage. Indian mutual funds attracted record inflows of $4.9 billion in July, according to the Association of Mutual Funds in India. Most of this came from individual traders, showing strong local interest despite global headwinds.
V K Vijayakumar, chief investment strategist at Geojit Investments, attributed the market weakness to “Trump’s aggressive tariffs and strained US-India ties,” coupled with lackluster earnings and expensive stock prices. This has emboldened bearish traders to increase short positions.
The ongoing selloff has resulted in Indian equities suffering their longest losing streak since the onset of the Covid-19 pandemic. In July, Chinese stocks outperformed Indian shares by about eight percentage points, marking their widest performance gap since February 2025.
