FIIs remain overweight on India, says BofA ML survey

According to BofA ML analysts, investors in Asia and UK/Europe are generally overweight on India and have added weight to Indian equity markets for the past six months.

The report, however, highlighted that the recent market outperformance and the overweight position of India vis-a-via other emerging markets continued to pose a risk to Indian equities, given the uncertainties on interest rate cycle and current account deficits.

The report stated that China posed a near-term risk to India as fears of hard landing in world's largest second economy have abated.

“While reforms and rate cuts are a structural positive, investors are now wondering whether we will see a cyclical shift into China. Though, structurally, the investors we spoke with still prefer the Indian economy over China, there is a possibility of a move towards China over next few months,” said the report led by analysts Jyotivardhan Jaipuria and Anand Kumar.

Last year, investors were worried about hard-landing of the Chinese economy and were underweight on China. India received the highest capital inflow from foreign portfolio investors.

The report raised certain key questions — the Reserve Bank of India stance on monetary easing — based on the feedback BofA ML received from overseas investors. While BofA ML expected a 125 bps cut in interest rates by

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