In spite of the strong rally seen across equity markets globally so far in 2013, investors reckon that stocks still have further to go this year, according to a new survey.

Results from the Bank of America (BofA) Merrill Lynch Fund Manager Survey for February showed that investors continue to perceive value in equities this year, with a net 13% of those asked saying that stocks are still undervalued.

Meanwhile, the outlook for profits has improved with 39% of the panel saying the bottom lines of companies worldwide should increase in the coming 12 months, compared with just 29% in January.

The report, which surveys over 250 panellists with $691bn of assets under management, showed that they were more bullish on spending, with 48% of fund managers saying that capital expenditure is the best use of corporate cash, the highest reading since April 2011.

Meanwhile, 59% of investors think that the global economy will strengthen in the year ahead, in line with the reading in January, which marked four straight months of rising sentiment.

"The continued high level of optimism is a concern and markets may be vulnerable to bad news, but valuation support suggests any correction should be short and shallow, and our core 'Great Rotation' theme remains in play," said Michael Hartnett, the chief investment strategist at BofA Merrill Lynch Global Research.

The survey said: "Allocations towards equities have held at the highs reached in January. A net 51% of asset allocators remain overweight global equities. Within equities, sectoral allocations highlight a bias towards a measured easing of risk appetite with a shift towards defensive assets."

Pharmaceuticals has jumped up the tables and is now the number-one sectoral pick for global investors, up from third in January, after the proportion of investors with an overweight position in the sector up from 11% to 27%.

A separate survey by TrimTabs and BarclayHedge showed on Tuesday that bullishness on the S&P 500 surged to a 12-month high in late January.

The report found that more than two-thirds of respondents see less than a 50/50 chance of a sharp correction in the S&P 500 in the first half of 2013.

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