Emerging market investors have adopted "a modest overweight" position on Indian shares for the first time since July 2010, according to Bank of America-Merrill Lynch's survey of fund managers, which was out on Wednesday.
However, among Asia-Pacific investors, India was among the least favoured region, alongside Australia and Philippines, according to the BofA-ML survey.
The BSE Sensex rose 25.7% in 2012, outperforming the regional benchmark MSCI Asia Ex Japan index, which rose 18.56% in the same period.
In a separate report, BofA-ML says investors are "generally overweight" on India, based on feedback from investors in the UK and Europe, having added to their positions in the past six months.
However, part of that preference was driven by an "underweight" position in China.
With the risk of a hard landing receding in China, and with a potential cyclical shift in the making, BofA-Merrill says, "there is a possibility of a move towards China over next few months".
