UBS Global Wealth Management suggests that investors should increase their asset allocations in Indian stocks, despite recent market fluctuations.

The Indian market has experienced a decline of approximately 5-6% from its recent peak, partly due to a recovery in China and domestic challenges such as adverse weather conditions and a slowdown in government spending. However, UBS believes that this slowdown is temporary and predicts that India's growth will stabilize around 7%, maintaining its position as one of the fastest-growing economies in the G20.

Currently, India's representation in the Asia ex-Japan index is slightly lower than that of China, standing at 22%. Foreign investment in India is limited due to difficulties in direct market access and the perception of India as a relatively expensive market. UBS views the current market setback as a favorable opportunity for investors to enhance their foundational or strategic asset allocations in India.