CLSA had reduced its Indian overweight to 10 per cent from 20 per cent and raising our China allocation to a 5 per cent overweight from the benchmark.

China's recent economic woes, including trade tensions with the US and falling property prices, will likely continue to weigh on the Chinese equity market, it believes. In contrast, India is seen as a more attractive investment destination due to its strong economic growth and relatively low exposure to trade risks, CLSA said in a note.

Turning ‘overweight’ essentially means Indian equities should perform better compared with other markets. The reversal is also attributed to an escalation of a trade war between US and China with Trump proposing up to 60 per cent tariff on Chinese imports into the US during his Presidential campaign and an underwhelming stimulus package by the Chinese government.