MUMBAI - Global fund managers increased their allocation to China at India's expense after Asia's largest economy unleashed a stimulus package, according to a survey conducted by BofA Securities.

Last Saturday, China pledged to significantly increase debt to revive its sputtering economy. China's central bank in September announced the most aggressive monetary support measures since the pandemic.

"Growth expectations for China sprung back to life following the policy pivot," BofA Securities said in a note on Tuesday.

"(Survey) participants believe this time is different, as they abandon their search for opportunities elsewhere and look back into China."

Their renewed focus on China came at the cost of their allocation to Indian equities, BofA's survey showed.

Foreign investors have taken out nearly $8 billion from Indian equities so far in October, on track to be the largest outflow since March 2020 at the peak of the pandemic fears.

In August, a large number of fund managers were overweight on India relative to those who were underweight. They have now changed their positions, according to the survey.

The survey did not specify whether they had shifted to underweight or neutral.

The shift in the mood towards China comes as analysts caution investors about high valuations in Indian equities, which have struggled on the back of a foreign money exodus.

India's benchmark Nifty 50 index has declined about 5% from its record high hit in the last week of September.

Meanwhile, China's key equity index last week climbed to the highest in more than two years.

"The Chinese market has become meaningfully attractive in terms of valuation, and that combined with an expectation of stimulus has attracted capital," Trideep Bhattacharya, president and chief investment officer for equities at Edelweiss Asset Management, said.

India's 12-month forward price/equity ratio is 24 times, about 23% higher than the last 10-year average, according to BofA. China's is 10.7 times, about 7% below the long-term average.

(Reporting by Nimesh Vora and Jaspreet Karla; Editing by Abinaya Vijayaraghavan)