Nomura Report: Indian Stocks Lose Weight as Investors Shift to Asian Peers

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Indian stocks have become the most underweighted market among emerging market (EM) investors, according to a report from Nomura. The shift comes after global investors accelerated their rotation towards other Asian peers last month, seeking better returns and valuations.

Why India Is Losing Weightage

Nomura analysts pointed out that higher valuations and slowing earnings growth in India have made investors cautious. While India continues to attract long-term interest, the short-term positioning has weakened compared to markets like South Korea, Taiwan, and China, which are currently offering more attractive opportunities.

The reallocation trend shows investors moving more aggressively into other Asian markets. Factors such as technology-driven growth in South Korea and Taiwan and renewed policy support in China have made these markets relatively more appealing.

Despite this underweight status, experts note that global funds are not exiting India entirely. Instead, the move reflects a tactical rebalancing, with investors booking profits after India’s strong market performance over the last two years.

Analysts believe Indian equities still hold long-term promise, given the country’s domestic demand story, reforms push, and strong corporate governance. However, in the near term, global investors are expected to remain cautious until earnings momentum picks up again.