Every investment 101 guide lists geographical diversification as the cornerstone of lucrative investment strategies. Given the promising big tech giants and budding startups ruling the US stock market, seizing investment opportunities there is a no-brainer. However, in everything from size and currency to basic investment norms, investing in India vs the USA spells a different ball game. Let’s find out which is better — Indian stock market vs US stocks market.
*One of the fastest growing stock markets worldwide
*Operates through a depository system with stocks held in a Demat account
*Trading occurs on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE)
*The Sensex index tracks the top 30 largest stocks on the BSE, while the Nifty Index includes the top 50 highest-traded stocks on the NSE
*Highly diverse market with major players like Amazon, Tesla, and Microsoft
*Operates on a custodial model where securities are held in an account with a custodian bank
*The New York Stock Exchange (NYSE) is the oldest and largest stock exchange, while NASDAQ is known for hosting major tech companies
*Key indices include the Dow Jones Industrial Average (DJIA), S&P 500, and NASDAQ Composite
This US vs Indian stock market comparison shows the clear benefits of US portfolio diversification. The global exposure of this market helps moderate market movements in the long run, balancing out volatility and hedging risks associated with a hyper-volatile domestic market. Similarly, since the investment is in USD, there’s also a possibility of higher returns, given the history of dollar appreciation.
Want to know the difference between Indian market and US market? Here's all you need to know.
Over the past decade, the Dow Jones index outperformed the BSE Sensex in six out of ten years in terms of annual returns.
Comparing the Indian stock market to the US stock market reveals intriguing insights. While the Indian market is known for its rapid growth, operating through a depository system and prominent exchanges like BSE and NSE, the US market boasts diversity and is home to renowned companies such as Amazon, Tesla, and Microsoft. With its custodial model and significant exchanges like NYSE and NASDAQ, the US market offers global exposure and the potential for higher returns due to the historical appreciation of the dollar. Therefore, considering portfolio diversification and the advantages the US market offers can be a wise investment strategy.
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As of December 2022, the US stock market has a market capitalisation of $40.51 trillion, while the Indian market cap is $3.4 trillion. The US market is over 10 times larger than its Indian counterpart.
The US stock market operates on a custodial model, while the Indian market follows a depository model. The US market is regulated by the Securities and Exchange Commission (SEC), whereas the Indian market is governed by the Securities and Exchange Board of India.
The Indian stock market predominantly lists domestic companies, whereas the US market is home to both prominent global companies and major corporations from various countries, including China, London, and other key cities.