Foreign institutional investors betting big on India, China

Foreign institutional investors (FIIs) continue to be bullish on the Asian markets, having India and China as their favourites. CNBC-TV18's Neha Bothra and Shweta Sriram report.

Global investors have given Asia a thumps up. The scales may tilt in China's favour, since many FIIs expect interest rates in India to rise January onwards. Investors are of the opinion that despite strong economic growth, India is seeing a higher buildup of inflationary pressures.

Jonathon Garner of Morgan Stanley said, "We are overweight Indian equities, as we have been around election time in the early summer. However, we have reined back in the overweight. We took some money from our India overweight to invest in China. "

Hardly, 10% of these investors are betting on a W-shaped recession. There is a clear preference for equities in emerging markets.

Gary Baker, Head of European Equity Strategy at Bank of America said, "A large number of investors expect strong growth next year. Equities are the largest overweight in asset allocation. Investors have increased the allocation to commodities."

Global investors also see more opportunities in real estate and financial services sectors.

Jon Thorn of India Capital Management said, "We like very big, overweight banks and financials. We believe that the sector has a lot to offer in long term. The gross domestic product (GDP) is going to grow in a very strong and persistent way."

Clearly, the money is on the tiger and the dragon for the time being. However, the question remains on which of it will emerge stronger?