3
MIN
FACT CHECKED
Reviewed by
.
Created on
March 6, 2023
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 USstocks market.
Indian Stock Market vs US Stock Market:An Overview
Indian Stock 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
US Stock Market
*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
Comparing Marketplaces
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.
YEAR | DOW JONES | BSE SENSEX |
2011 | 2.74% | -15.67% |
2012 | 3.73% | 12.99% |
2013 | 19.60% | 6.41% |
2014 | 13.53% | 34.05% |
2015 | 1.52% | -10.50% |
2016 | 20.02% | 7.06% |
2017 | 24.44% | 23.14% |
2018 | -10.79% | 0.29% |
2019 | 14.16% | 13.78% |
2020 | 6.70% | 12.14% |
Over the past decade, the Dow Jones index outperformed the BSE Sensex in six out of ten years in terms of annual returns.
Conclusion
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.
Explore US Stocks on The Fi App
Fi provides the opportunity to invest in leading US companies, such as Apple, Tesla, and Microsoft, at the best forex rates in the industry. With a user-friendly interface, Fi simplifies the process of investing in US Stocks through their trusted broker partner, Alpaca Securities, which FINRA regulates. Whether you're a beginner or an experienced investor, Fi offers in-app explanations and curated collections, like All-Time Favorites, to aid decision-making. Advanced investors can explore further by applying various filters, including stock price, and selecting from a wide range of international options.
Frequently Asked Questions
1. In terms of market size, is the US market bigger than the Indian stock market?
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.
2. Who sets regulations and policies that govern these two stock markets?
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.
3. What are the types of companies listed in the Indian and US stock markets?
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.
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.
As an enthusiast with a demonstrable depth of knowledge in the field of finance and investment, I can confidently provide insights into the concepts used in the provided article, "Indian Stock Market vs US Stock Market." My expertise is rooted in a comprehensive understanding of global financial markets, investment strategies, and the nuances of diverse financial instruments.
Let's break down the key concepts mentioned in the article:
-
Geographical Diversification:
- The article highlights geographical diversification as a fundamental principle in lucrative investment strategies. Geographical diversification involves spreading investments across different regions to mitigate risks associated with the performance of a particular market.
-
Indian Stock Market:
- Described as one of the fastest-growing stock markets globally.
- 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).
- Key indices include the Sensex and Nifty, tracking the top stocks on BSE and NSE, respectively.
-
US Stock Market:
- Notable for its high diversity, featuring major players like Amazon, Tesla, and Microsoft.
- Operates on a custodial model where securities are held in an account with a custodian bank.
- Key stock exchanges include the New York Stock Exchange (NYSE) and NASDAQ.
- Key indices include the Dow Jones Industrial Average (DJIA), S&P 500, and NASDAQ Composite.
-
Market Comparison:
- The article emphasizes the benefits of US portfolio diversification, citing global exposure, moderation of market movements, and the potential for higher returns due to the historical appreciation of the US dollar.
- A comparison of annual returns between Dow Jones and BSE Sensex over the past decade is presented.
-
Conclusion:
- The conclusion underscores the intriguing insights gained from comparing the Indian and US stock markets.
- While the Indian market is known for rapid growth and a depository system, the US market offers diversity, global exposure, and potential for higher returns.
- Portfolio diversification and the advantages of the US market are highlighted as a wise investment strategy.
-
Fi App and US Stocks:
- The article introduces the Fi app, providing an opportunity to invest in leading US companies.
- Fi simplifies the investment process through a user-friendly interface and trusted broker partner, Alpaca Securities, regulated by FINRA.
- Features of the Fi app, including curated collections and in-app explanations, are mentioned.
-
Frequently Asked Questions (FAQs):
- FAQs address market size comparisons, regulatory bodies governing the markets (SEC for the US and SEBI for India), and the types of companies listed in each market.
In summary, the article provides a comprehensive comparison between the Indian and US stock markets, emphasizing the importance of diversification and showcasing the advantages of investing in the US market through the Fi app. The inclusion of historical performance data adds empirical support to the presented arguments.
