The US stock market has earned more than the Indian stock market, here's the full story

Global diversification once again proved its worth in FY26, as US equities significantly outperformed Indian markets, delivering the largest return gap in recent years. 

Data compiled by Appreciate shows that while Indian indices struggled amid volatility and geopolitical concerns, US markets delivered strong double-digit returns, boosted by currency weakness. Let's take a look at the data we're seeing for the US and Indian stock markets.

A tremendous difference was seen

The headline figures tell the whole story. In FY26, the Nifty50 declined 5.05 percent, 

while the S&P 500 returned a robust 28.09 percent in rupee terms—a massive 33 percentage point performance difference. US markets also remained strong in dollar terms. The S&P 500 gained 15.87 percent, while the Nasdaq Composite surged 23.91 percent.

However, the Indian rupee's weakening against the US dollar—falling from 85.64 rupees to 94.65 rupees, a decline of 10.6 percent—significantly boosted the returns of Indian investors holding US assets. 

As already mentioned, the S&P 500 returned 28.09 percent in rupee terms, while the Nasdaq Composite returned 34.3 percent. The Dow Jones Industrial Average (DJI) returned 19.3 percent in rupee terms.

Subho Maulik, Founder and CEO of Appreciate, said in an ET report that the rupee weakened by 8.6 percent against the dollar in FY26. This single figure completely changed the return scenario for every Indian investor holding dollar assets. 

He explained that this pattern is not new. Over the past 15 years, Rs 1 lakh invested in the S&P 500 has grown to Rs 10.44 lakh. Similarly, Rs 1 lakh invested in the Nifty 50 has grown to Rs 3.83 lakh.

Indian markets perform sluggishly

Notably, the best-performing broad index of the Indian markets—the Nifty Midcap 50—also lagged the Dow Jones Industrial Average by more than 16 percentage points in rupee terms. Currency gains bolster returns. 

Data show that the Nifty 50 declined 2.65 percent in the last fiscal year, while the Nifty Smallcap 100 declined 3.17 percent. The Nifty Midcap 100 returned 3.12 percent and the Nifty Midcap 50 returned 4.12 percent. 

The sharp rupee depreciation played a significant role in boosting returns from US equities. For Indian investors, foreign investments not only provide equity market benefits but also benefit from currency fluctuations.

Fluctuations amid geopolitical uncertainty

Despite strong returns, FY26 was not without its share of turmoil. US markets experienced significant volatility; the S&P 500 fluctuated within a wide range of 4,835 to 7,002 throughout the year, finally closing at 6,528.52 on March 31, 2026. 

Similarly, the Nasdaq Composite fluctuated between 14,784 and 24,020 before closing at 21,590.63. 

The Dow Jones Industrial Average ended the fiscal year at 46,341.51. Market volatility remained high. The VIX stood at 24.60 at the end of FY26, primarily due to geopolitical tensions, particularly the dispute with Iran.

The US market performed better even in the year 2025

Looking at calendar year 2025, US equities continued their strong gains. The S&P 500 returned 17.9% in dollar terms and approximately 232.4% in rupee terms. This makes it one of the best-performing asset classes for Indian investors—second only to gold.

The Nasdaq returned approximately 27% in INR terms, while the Dow returned approximately 20%. This marked the third consecutive year of double-digit gains for US markets. 

In comparison, the Nifty 50 returned approximately 10.5% in CY2025, significantly lagging behind US markets.

What does this mean for Indian investors?

This huge divergence in FY2026 teaches investors an important lesson—the importance of global diversification. While Indian markets remain fundamentally strong over the long term, periods of underperformance are inevitable. 

Investing in global equities, especially US equities, can help balance portfolios and improve risk-adjusted returns. Furthermore, currency fluctuations can act as a natural hedge—especially when domestic markets are experiencing weakness.

The Big Picture

FY2026 reflects a major trend: global markets, led by the US, continued to benefit from strong earnings growth, technological innovation, and the influx of global capital. Meanwhile, 

the Indian market faced headwinds from valuation concerns, slower earnings growth, and geopolitical risks. For investors, the lesson is clear—in an increasingly interconnected world, spreading your investments across multiple locations is no longer just an option, but a necessity.

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