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What is the Difference Between Indian and US Stock Markets?

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January 12, 2023


What’s Inside

Whether you’re new to stock market investing or not, investing in any stock market comes with its own nuances. The differences are many. For one, the US stock market allows you to buy fractional shares - just a part of a share instead of the whole share. US stocks also require no demat account like the way we have it here in India.

Indian stock market vs the US stock market: The key differences

The Indian stock market and the US stock market differ from one another in diversification, volatility, currency (of course) and even in size (also known as market cap). Here’s a summary of each:

Market size

The US market is much larger. The S&P 500 index has a total market cap of $40 trillion (as of January, 2023). By contrast, the Sensex, which is the BSE’s index, has a market cap of roughly $4 trillion. 


It's the range and the extent of price movements in the stocks traded in any market. The greater the price movements, the higher the volatility. This translates to a higher degree of risk. The Indian stock market is slightly more volatile than its American counterpart.

For long-term investors, this may not matter a great deal. However, for day traders and short-term investors, volatility can significantly impact the returns. This is because over the long run, the price movements from different market cycles tend to get nullified to a certain extent. Short-term price movements can directly affect returns, since you will sell your holdings within the same market cycle. 

Level of diversification

In the Indian stock markets, the stocks listed belong primarily to Indian companies. In the US markets, however, you can find a vast number of foreign companies listed. This indicates that the level of diversification is higher in the US markets when compared with the Indian markets. 

So, by investing in the US markets, you can diversify your portfolio more effectively. In India, you can still diversify your portfolio across sectors. The geographical diversification, however, would be more limited compared to the US markets. 

Market performance 

To compare the performance of the US stock market vs the Indian stock market, we need to compare the key indices. Here is how the 5-year performance of the key indices in the Indian and the US markets stand (as of December, 2022).

  • BSE Sensex: Around 87% up
  • Nifty: Around 80.09% up
  • DJIA: Around 38.9% up 
  • S&P 500: Around 49.44% up

Although both markets have performed well over the last 5 years, the Indian markets have recorded bigger jumps. This is because the US markets are more matured and, therefore, more stable.

Currency used

The strength of the rupee against the dollar matters a great deal. 

For instance, if you invest in the US markets and your investments increase in value, your portfolio value in INR will also increase exponentially, especially if the rupee is weakening against the dollar. 


To sum up, the US market is larger, more diversified and matured. This makes it a good investment avenue. Added to this, the falling Rupee against the US dollar (the world’s reserve currency) makes it an even better investment.

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Frequently Asked Questions (FAQs)

1. Which stock market is better: India’s or the USA’s?

Each stock market has its own advantages and downsides. However, historically, the US stock market has been slightly less volatile and has delivered marginally higher returns than the Indian stock market.

2. Does the US stock market affect the Indian stock market?

Yes, the US stock market is the largest in the world. And naturally, any major negative movements could have a ripple effect on other stock markets worldwide, including India’s. So, whether you are investing in the Indian stock market or the US market, it helps to keep track of the US economy in general.

3. Can Indians buy stocks in the US market?

Yes, Indians can buy stocks in the US stock market. You can buy US stocks on Fi Money by creating an account in 5 minutes or less. Your investments are real-time, and have no brokerage or commissions attached. 


Investment and securities are subject to market risks. Please read all the related documents carefully before investing. The contents of this article are for informational purposes only, and not to be taken as a recommendation to buy or sell securities, mutual funds, or any other financial products.
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