Outlook for indian stocks improves in March, say Global Fund Managers

MUMBAI: Indian equities are slowly regaining the confidence of foreign portfolio investors. Though fund managers are maintaining an underweight position, their outlook for Indian shares has improved in March - the second consecutive month -according to a fund manager survey conducted by Bank of America-Merrill Lynch. "The massive rally in India since the start of the year has helped fund managers reduce their underweight position to -6% this month," the Bank of America-Merrill Lynch survey said. Indian benchmark indices have gained over 11% so far in 2012 driven by foreign institutional inflows to the tune ofRs44,000 crore. China continues to be a favoured market among foreign portfolio investors. About 41% of the respondents said they were bullish on Chinese equities. A section of the fund managers polled by BofA-ML, however, expressed concerns about China's growth prospects in the coming months. A net 9% of respondents say China's economy will weaken in the next year, up from a net 2% in February. Also, sentiment within Asia Pacific (excluding Japan) has dampened. A net 41% of respondents to the regional survey expected the region's economy to weaken in the year ahead, up from a net 35% in February. Foreign fund managers continued to be overweight on Brazil and Russia in March, according to the BofA-ML survey. They have reduced their investments in Indonesia to 12% in March. Investors have been overweight on Indonesia for the past 13 months, the report said. Technology and energy are the consensus 'overweights' for the fourth straight month among Asian investors. At about 41%, allocation to energy sector is now tipped at the highest point since November 2010. Cyclicals such as industrials and materials were also beneficiaries of the improving outlook for global growth. Allocation to banks, utilities and telecom companies have come off sharply from previous months, the BofA-ML survey report said.