"The mandate that Modi has really gives you optimism that India will finally make their political process more efficient and be able to tackle their infrastructure issues to unlock the country's potential," said Andrew Douglas, who oversees about $2 billion as the chief investment officer of the wealth management group at Dubuque, Iowa-based Heartland Financial USA and participated in the poll. "Brazil seems to be doing everything wrong."
India's S&P BSE Sensex index surged 21 percent this year through Thursday on optimism Modi's pledges to cut red tape and attract investment will boost Asia's third-largest economy after growth slowed to near a decade low. Exchange-traded funds that invest in the country lured more inflows than any other emerging market this year, while investors pulled money from Brazil as the economy sunk into stagflation under Rousseff's watch.
The MSCI Emerging Markets Index has gained 6 percent this year, fueled by signs of a recovery in the Chinese economy and as concern eased that rising borrowing costs in the U.S. will spur capital outflows. Forty-eight percent of respondents in the Bloomberg poll said the developing-nation stock index will climb in the next six months, versus 27 percent who said it will fall. The poll of 562 Bloomberg users was conducted July 15 and 16 by Selzer & Co., a Des Moines, Iowa-based firm, and has a margin of error of plus or minus 4.1 percentage points.
While Brazil's benchmark Ibovespa index has risen 8 percent this year on speculation Rousseff's declining popularity among voters will lead to new economic policies, financial professionals are turning more bearish. Just seven percent of respondents said Brazil offers the best opportunities, matching the lowest mark the South American country has received since the poll's inception.
The Ibovespa surged 2.4 percent Friday after a poll published last night in newspaper Folha de Sao Paulo's online edition showed Rousseff continuing to lose support among Brazilian voters. She would win just 44 percent of the vote in a second round against candidate Aecio Neves, who would get 40 percent. The previous poll, conducted July 1-2, showed her winning the runoff with 46 percent against Neves's 39 percent.
Forty percent of the Bloomberg Global Poll's respondents saw the worst opportunities in Russia. The Micex stock index and the ruble tumbled Thursday on new U.S. sanctions designed to punish President Vladimir Putin for failing to end support for rebels in Ukraine. Russian shares extended the selloff Friday after a Malaysian passenger jet was shot down in eastern Ukraine, killing all on board.
In India, the May 16 election victory for Modi, 63, has investors anticipating he will replicate at the national level the success he had as government of Gujarat state, where he oversaw annual economic growth of 10 percent since 2001. Under former Prime Minister Manmohan Singh's Congress party, the growth rate fell to a decade-low of 4.5 percent in the year ended March 2013.
Growing optimism toward India is already making stocks more expensive. The Sensex is valued at 15.6 times estimated profit for the next 12 months, within about 3 percent of the highest level since January 2011, according to data compiled by Bloomberg.
The last time respondents in the Bloomberg poll were this optimistic on India, the nation's stock market dropped 17 percent over the following year.
There are few signs so far, though, of a slowdown in foreign inflows. U.S-listed ETFs that invest in India attracted more than $1 billion this year, while exchange data show foreigners added a net $11.3 billion to holdings of locally- listed shares, the most among eight Asian markets tracked by Bloomberg.
India's poll ranking for the best opportunities has climbed faster than any other major market, now tied with the European Union for second behind the U.S., from sixth in September.
"Foreign funds continue to remain bullish and positive on Indian markets, which is adding to confidence," Arindam Ghosh, the chief executive officer at Black Ridge Capital Advisors in Mumbai, said in an interview with Bloomberg TV India. "The Indian market trend is going to be up."