Investing.com -- Investor sentiment in India has entered the panic zone, driven by persistent foreign selling and a shift of capital towards China, Bank of America (NYSE:BAC) analysts said in a note.
BofA’s contrarian sentiment indicator, Global Equity Risk-Love, has retreated to a neutral stance, sitting at the 48th percentile of historical levels, down from euphoric levels at the start of the year (90th percentile). The shift coincides with key market developments across multiple regions, the bank said.
India’s Risk-Love metric breaking into panic territory suggests that much of the negative sentiment may already be reflected in prices, BofA noted.
However, the bank cautioned that investors may want to wait for a breakout from the panic zone before acting aggressively.
Historical data since 1995 indicates a 73% probability of positive returns in the 12 months following such a breakout, with median returns of 10% and an average of 24%.
The report highlighted that among 15 past instances, the signal did not hold in three cases—1977, 2011, and 2019.
Meanwhile, sentiment in China remains elevated at the 74th percentile, with further upside potential despite staying below euphoric levels.
Korea’s Risk-Love index stands at the 13th percentile, near panic territory, with historical patterns suggesting a 78% chance of positive six-month returns.
Other Asian markets are exhibiting mixed sentiment. Japan remains in a neutral range (56th percentile), while Taiwan shows muted investor appetite for AI and semiconductor stocks.
Southeast Asian markets reflect mostly neutral sentiment, with mild panic observed in Thailand.
Across emerging markets, South Africa has reached euphoric sentiment levels, Poland is approaching euphoria, while Türkiye and Latin America remain in neutral zones, BofA said.
This content was originally published on Investing.com
