Global diversification once again proved its importance in FY26, as US equities outperformed Indian markets, showing the biggest difference in returns 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, further boosted by currency weakening. Let us also tell you what kind of data is being seen in the American and Indian stock markets.
A tremendous difference was seen
The key figure tells the whole story. The Nifty50 declined 5.05 per cent in FY26, while the S&P 500 returned a whopping 28.09 per cent in rupee terms—creating a whopping 33 percentage points difference in performance. US markets remained strong even on dollar basis. The S&P 500 gained 15.87 percent, while the Nasdaq Composite jumped 23.91 percent.
However, the weakening of the Indian rupee against the US dollar—falling from Rs 85.64 to Rs 94.65, a decline of 10.6 per cent—substantially boosted returns for Indian investors holding US assets. As already mentioned, on rupee basis, S&P 500 has given a return of 28.09 percent and Nasdaq Composite has given a return of 34.3 percent to the investors. Whereas Dow Jones has earned 19.3 percent on rupee basis.
Subho Maulik, Founder and CEO of Appreciate, said in an ET report that the rupee weakened by 8.6 per cent against the dollar in FY26. This one figure completely changed the return scenario for every Indian investor holding dollar assets. He explained that this pattern is not new. In the last 15 years, Rs 1 lakh invested in S&P 500 grew to Rs 10.44 lakh. At the same time, the same Rs 1 lakh invested in Nifty 50 increased to Rs 3.83 lakh.
Performance of Indian markets remained sluggish
What is special is that the best performing broad index of Indian markets—Nifty Midcap 50—also lagged behind Dow Jones by more than 16 percentage points in rupee terms. Currency gains increase returns. If we look at the data, there was a decline of 2.65 percent in Nifty 50 in the last financial year. Whereas Nifty Smallcap 100 declined by 3.17 percent. While Nifty Midcap 100 saw a return of 3.12 percent and Nifty Midcap 50 saw a return of 4.12 percent. The sharp fall in rupee played an important role in increasing the returns from US equities. For Indian investors, foreign investment not only provides equity market benefits but also benefits from currency fluctuations.
Fluctuations amid geopolitical uncertainty
Despite strong returns, FY26 was not without turmoil. Huge fluctuations were seen in US markets; The S&P 500 moved throughout the year in a wide range of 4,835 to 7,002, and finally closed at 6,528.52 on March 31, 2026. Similarly, Nasdaq Composite closed at 21,590.63 after moving up and down between 14,784 and 24,020. Dow Jones stood at 46,341.51 at the end of the financial year. The level of volatility in the market remained high. At the end of FY 2026, VIX was at 24.60. The main reason for this was geopolitical tension, especially the dispute related to Iran.
American market had performed better even in the year 2025
Looking ahead to calendar year 2025, US equities continued their strong rise. S&P 500 gave a return of 17.9 percent in dollar terms and about 2324 percent in rupee terms. This has made it one of the best performing asset classes for Indian investors—second only to gold.
Nasdaq gave returns of about 27 percent in INR terms, while Dow gave returns of about 20 percent. This was the third consecutive year for US markets in which double digit growth was recorded. In comparison, the Nifty 50 returned about 10.5 per cent in CY2025, which lagged far behind the US markets.
What does this mean for Indian investors?
This huge difference seen in the financial year 2026 teaches an important lesson to investors – how important it is to bring diversity in investment at the global level. Although Indian markets remain fundamentally strong over the long term, there are bound to be periods of underperformance from time to time. Investing in global equities, especially US equities, can help balance a portfolio and improve risk-adjusted returns. Additionally, currency fluctuations can act as a ‘natural hedge’—especially when domestic markets are experiencing weakness.
big picture
Financial year 2026 shows a big trend that the global market, led by the US, is continuously benefiting from strong earnings growth, new changes in technology and influx of global capital. At the same time, the Indian market faced difficulties due to valuation concerns, slow earnings growth and geopolitical risks. For investors, the lesson is clear—in an increasingly interconnected world, diversifying your investments across geographies is no longer just an option, but a necessity.