Comparative Analysis of Indian and US Stock Markets in 2026

India is now a rising powerhouse, while the US remains the world’s financial centre. Together, they cover two very different growth stories.  

• As of 2025, India’s market cap is around USD 5.3 trillion (about 4% of global market cap), ranking 5th globally, while the US stands above USD 62 trillion by far the largest equity market.  

• India’s demat accounts crossed 21 crore in October 2025, reflecting an explosion in retail participation, while the US has long been a mature, 50%+ household-equity-ownership market via 401(k)s, ETFs and pensions.  

For a Rits Capital client, this basically means: India is where structural growth and domestic participation are booming; the US is where innovation giants and reserve-currency safety sit. 

Returns: Who has done better? 

If you look only at the last 10 years, US and Indian indices have delivered surprisingly similar headline returns—but the story changes once you adjust for currency and longer history.  

• Over the last decade, Sensex and Dow Jones both did ~9.7–9.8% CAGR in local currency; the S&P 500 slightly outperformed Nifty 50 in USD terms due to rupee depreciation.  

• Zoom out: from December 1998, Nifty 50 TRI in USD delivered about 1,922% total returns (~11.78% CAGR), beating the S&P 500’s ~821% (~8.57% CAGR) over ~27 years, even after accounting for INR depreciation.  

In rupees, Nifty often looks even better; in dollars, the gap narrows but still favours Indian equities over very long periods—backing the case for India as a structural overweight for Indian residents.  

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Volatility, risk and currency angle 

Returns are only half the story. Risk, drawdowns and currency behaviour decide whether you sleep at night.​ 

• Volatility: Over the last decade, Dow Jones’ volatility was ~3.9% vs Sensex at ~5.1%, meaning India gave similar returns with noticeably higher ups and downs.  

• Currency: Rupee depreciation (historically 3–4% per year vs USD) eats into your dollar-adjusted Indian returns but boosts the attractiveness of owning US assets for Indian HNIs looking to preserve global purchasing power.  

So, if your expenses and goals are in INR (house, kids’ education in India), overweight India makes sense; if significant future liabilities are in USD (US college, offshore lifestyle), US exposure becomes non-negotiable. 

Market structure, sectors and opportunities 

The two markets don’t just differ in size; they offer very different sector mixes and opportunity sets.  

• US is mega-cap and tech-heavy: S&P 500 is dominated by Apple, Microsoft, Nvidia, Amazon, Alphabet, etc., making it a global innovation proxy.  

• India is more domestic economy driven Financials, consumption, manufacturing, infra and PSUs dominate indices like Nifty 50 and NSE 500, mirroring India’s GDP mix and capex cycle.  

Correlation between Indian and US markets is significant but not perfect, which means combining both reduces portfolio risk and smooths drawdowns over long periods.  

Practical takeaways: How should an Indian investor allocate? 

From an Rits capital lens, the real edge is in getting the allocation framework right, not in “which is better?” clickbait.  

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For a typical Indian resident investor: 

• Core 60–80% equity in India (Nifty/NSE 500 + select active funds + direct stocks) to capture higher local growth and tax efficiency. 

• Satellite 20–40% in US/global equities via international mutual funds, index funds or LRS-based US accounts for currency hedge and exposure to global tech and brands.  

At Rits Capital, portfolios often: 

• Anchor in India (Nifty, mid/small, sector/thematic where justified). 

• Add US S&P 500 / Nasdaq 100 exposure for innovation and dollar diversification, sized to your income, goals and risk tolerance. 

FAQs:  

1. Have Indian stocks beaten US stocks historically? 
Ans: Over very long periods (since 1998), Nifty 50 TRI in USD has outperformed the S&P 500 in both total and annualised returns, but with higher volatility and deeper drawdowns.  

2. Is it safer to invest in the US market than India? 
Ans: US markets are more mature, less volatile and backed by the world’s reserve currency, but India offers higher growth and catch-up potential; safety depends on your time horizon and diversification, not geography alone.  

3. How much should I invest in US stocks as an Indian? 
Ans: Many planners suggest 10–30% of equity allocation abroad for currency diversification, adjusted for your global goals, risk profile and comfort with taxation and remittance rules.  

4. Does rupee depreciation always favour US investments? 
Ans: Depreciation boosts your INR value of US assets, but also reduces your USD-adjusted returns on India; the net effect depends on equity performance versus currency moves.  

5. Are taxes higher on US equity funds for Indian residents? 
Ans: Yes. Most India-domiciled international funds are taxed as debt (20% with indexation for >3 years), unlike domestic equity funds which enjoy favourable 12.5%/short-term slabs, so post-tax returns differ.  

6. Can I invest directly in US stocks from India? 
Ans: Yes, via Liberalised Remittance Scheme (LRS), up to USD 250,000 per year per individual, through registered platforms and foreign brokers; TCS and reporting rules apply.