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Differences Between Indian Stock Market and US Stock Market

07 Sep 2023

The only way to allocate your funds wisely is by diversification of your portfolio. For investors who seriously enter the domain of the markets, any markets, this is the primary way to reduce risks that are inherent in stock market investing. The Indian stock market has been the talk of the town in the recent past, with stocks reaching new highs. Sentiment has been bullish, but of late, investors are looking to newer horizons to invest funds. The Us market poses a good opportunity to do this, but before you get too enthusiastic about it, you should know that there exist some crucial differences between the Indian stock market and its US counterpart. 

Some Considerations

The key to prudent investment is diversification. By now, if you are an investor, or wish to become one, you may have come across advice to this effect. The economy we live in now, is a digital one, and a highly international one, by its very nature. It is important to diversify wealth across classes of a range of assets. India has long since believed this when it opened its markets and its economy to the world. Indians got access to goods and services from abroad, and foreign investors saw (and still view) India as an emerging market, rife with a world of growth possibilities. Investing in markets abroad may lead you to diversify your portfolio and gain the benefits of keeping your assets intact with minimal risk. 

Main Differences

As an investor, global or domestic, the first thing to do is to open a Demat account online. Once you do this, you have the advantages of investment at your feet. However, you would be prudent to know about the differences in how the US stock market contrasts with the Indian stock market. This would help in the way you take your investment decisions. The factors of contrast lie the aspects of investment mentioned below: 

  • Diversification of Funds - The main difference between the US stock market and the Indian stock market is that the US stock market has listings of companies all over the world, and not merely companies in the US. Indices that relate to the US stock market have listed companies that come from a variety of nations in the world. Therefore, if a countrywide emergency occurred, US markets may be dragged down, but not by much. Contrastingly, as far as India is concerned, the indices in the Indian stock market are dominated by Indian companies mainly. Therefore, Indian markets can rarely withstand major adverse events. 
  • Currency Differences - In relation to the Indian stock markets, all transactions and investments are conducted in INR. With the US stock market, this is done in USD naturally. The USD is the global currency by default and is a stronger currency than the INR. Hence, any investments made with the USD in play will bear higher returns. This spells more profit for the investors who invest in US markets. 
  • Dynamism and Volatility - Relative to Indian markets, US markets are less volatile. Put plainly, in the scenario of the long term, volatility in the markets occurs more on the Indian front than in the US stock market. Therefore, investment in the US stock market would be a safer bet as compared to Indian markets. 

Be an Informed Investor

With liberal investment regulations governing the Indian economy, there’s a good opportunity to invest in foreign markets. First, you must open a Demat account with a reliable broker who can lead you to the path of reasonable investment in foreign markets, like Motilal Oswal can.

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account 


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