Indian equities attracted the biggest foreign money in seven years in March and grabbed a major chunk of inflows into Asia on optimism about the upcoming general election, while most others in the region had a lacklustre show due to lingering global slowdown worries and weaker exports.
Overseas investors bought $4.96 billion worth of Asian shares in March, data from stock exchanges in South Korea, Taiwan, India, Thailand, the Philippines, Indonesian and Vietnam showed.
Indian stock markets received $4.89 billion, the biggest since February 2012, on expectations that Prime Minister Narendra Modi will come back to power in the over-a-month-long polls that commence next week.
On the back of solid flows, Sensex and Nifty gained about 7.7 percent last month, the highest among emerging markets.
"Most recent opinion polls have swayed in favour of the ruling coalition compared to three months ago, which had predicted a tighter contest," ANZ said in a report.
"This has helped revive sentiment towards Indian asset prices as a close contest is not considered the best outcome by markets."
South Korean markets witnessed inflows of $262 million, while Indonesia, Thailand, Vietnam and Philippines all had received about $100 million or less.
However, foreigners sold $512 million worth of Thai equities due to political uncertainty after a general election.
Delays in final results from Thailand's first polls in five years have added to uncertainties facing the slowing economy, raising the risk of political gridlock that could disrupt government spending and keep foreign investors away.
Overall, foreigners purchased $15.87 billion worth of stocks in the seven markets in the first quarter, the biggest in two years, data showed.
However, some analysts said fund flows would be difficult to sustain as the regional economy is pressured due to slowing global demand and the U.S.-China trade war.
Factory activity in China slightly recovered in March, but activity in Vietnam, Indonesia and the Philippines grew only at a modest pace. South Korea's factory activity contracted for a fifth straight month in March.
"Market participants are likely to shift their attention to slowing economic growth now that the U.S. yield curve has inverted – a development that is stoking recession fears," said Joanne Goh, equity strategist at DBS Bank.
She said political and economic stress in some of the emerging markets such as Turkey, Argentina and Brazil could flow through into Asia and affect asset prices.