India Faces a Tough Phase

India has become the least favored Asian stock market in a recent survey of global fund managers. The net overweight figure for India stands at minus 32%, which shows that more fund managers are choosing to stay underweight on India than overweight.

This is a disappointing sign for Indian investors, especially after a long period when India was seen as one of the more attractive markets in Asia.

Taiwan, Japan and South Korea Lead

While India is facing weak interest, Taiwan, Japan and South Korea are among the markets that fund managers currently prefer. Their net overweight numbers are positive, making them more favored choices. One reason behind India’s weak position is its market performance over the last two years. The Indian market has not performed as strongly as many investors expected. Its weight in global indexes has also been falling, which can further reduce interest from global investors.

India Has Seen This Before

However, being the least favored market does not mean that India will stay weak forever. A similar situation was seen around 2012–13, when India was also out of favor. After that period, the Indian stock market went on to perform very well. Markets often move through cycles. When a market stays weak or ignored for a long time, it can eventually see a strong comeback as investors return and prices move back toward their long-term average.

A Frustrating Time for Investors

For now, India is going through a frustrating period. Many investors may feel that the Indian market simply does not want to move ahead. But this is not the first time India has gone through such a phase. There have also been periods when India was one of the most preferred markets and global fund managers had high exposure to it. Market leadership keeps changing with time, and today’s least favorite market can become tomorrow’s favorite.

Time Correction Can Be Important

The current phase may be more about time correction than a major long-term breakdown. A market does not always need to fall sharply to correct. Sometimes prices stay in a range for a long period while earnings and business growth slowly catch up. Over the last 30 years, India has shown that its market can move forward because the economy has continued to grow. If India’s growth story remains strong, this cycle can change again.

Growth Will Decide the Next Move

The key question for investors is simple: Does India still have long-term growth? If the answer is yes, then the current period of weak performance may only be one part of a much longer market cycle. India may remain out of favor for some time, but there is no reason to assume that it will always be the least favored market in Asia. Market cycles change, and strong growth can bring investors back. For now, patience may be important as the market works through this difficult phase.