MUMBAI (TIP): In spite of a lacklustre year for emerging markets so far in 2015, India continues to be a preferred investment destination for foreign investors, buoyed by its growth prospects. The MSCI emerging markets index, which was down 0.3% on Wednesday, has fallen 14% so far in 2015.

Over the past week, foreign firms CLSA India and UBS India held their annual India forums to spell out their investment stances on Indian equities, which has seen some negatives in the form of an election loss in Bihar for the ruling NDA and a rebound in oil prices. India imports 70% of its crude requirements.

In its November survey of fund managers, Bank of America Merrill Lynch found that India had fallen out of favour from being the most overweight to neutral for the first time since October 2014. The survey revealed that China had moved up to the most overweight position as fund managers believed the Chinese economy would see improvements in the next 12 months, and were also less bearish on China’s growth prospects.

According to Anand Kumar, research analyst with Bank of America Merrill Lynch, the second-quarter corporate earnings have been weak with several one-off gains such as pension-related ones in Tata Steel and a telecoms tower sale by Bharti Airtel, masking poor results.

However, UBS head of global emerging markets Geoff Dennis thinks otherwise. “UBS is overweight on India within GEM (global emerging market) equities…we expect the market to outperform compared to GEMs based on strong GDP growth, reforms, relatively strong corporate sector performance and the scope for lower interest rates,” he said.

Even CLSA MD and equity strategist Christopher Woods maintained that he is bullish on India, though there are concerns that a lack of urgency in addressing bad-loan issues in state-run banks could delay the investment cycle. “It (India) remains a good story because its macro position is much better than most other emerging markets,” Woods said at a conference in Delhi on Monday.

While foreign portfolio investors have started selling Indian equities — they sold$517 million so far in November — the trend is more due to expectations of an US interest rate hike in December, which would give them attractive returns compared to India.