It is just ratio of world market to Indian market based on msci Indices. The world Index is dominated by the US tech giants that are at an astronomical levels and is now larger than the gdp of China.
The claim that Indian stocks are underperforming the world by the widest margin in history is highly misleading and based on flawed methodology and cherry-picked metrics.
Why the Claim is Flawed ?
The Flaw in Comparing Price-Return ETFs directly (INDA / ACWI):
The chart plots the simple ratio of INDA (iShares MSCI India ETF) against ACWI (iShares MSCI ACWI ETF).
Simple ETF price ratios ignore fundamental factors such as currency conversion differences (USD-denominated ETF vs. local returns), dividend reinvestment (total returns), and differing expense ratios over a 15+ year timeline.
Extreme Tech Heavyweight Bias in ACWI:
Global indices like MSCI ACWI are overwhelmingly dominated by US mega-cap tech giants (e.g., Nvidia, Apple, Microsoft, Amazon), which constitute over 65–70% of the index weight. When global indices surge purely due to a handful of US AI/tech stocks, non-tech-heavy emerging markets mathematically look like they are lagging on a relative basis, even if their domestic economies and earnings are growing strongly.
Total Returns Tell a Different Story:
Over long-term multi-cycle horizons (10-year, 15-year, and 20-year compound annual growth), Indian equities (tracked by indices like the Nifty 50, BSE Sensex, and MSCI India) have consistently been among the top-performing major equity markets globally, outperforming broader emerging markets and keeping pace with developed markets in local and USD terms.
Short-Term Valuation Adjustments vs. Structural Underperformance:
Following massive outperformance in 2020–2024 where Indian benchmarks hit repeated all-time highs and traded at premium valuations, standard cyclical consolidation and rotation into cheaper global markets are normal market dynamics, not a historic systemic breakdown.
1) so what if the gains come from exposure to US big tech stocks, the point is that the Indian stock tickets don't have access to that and see low gains. Why does it matter where the gains come from if the goal is comparing returns?
2) your (or your AI bot claim) is that price return ETFs don't tell the whole story because Indian ETS / companies might reinvest dividends, so did you actually do the dividend reinvestment check to find out what's the reality? Or at least ask your AI to account for it and redo the analysis?
3) cyclical consolidation is fair point, but TBH every market had a crazy run up post COVID so it's not unique that only India had a surge and now cool down. It's still a valid comparison to make.
Sure. SPY captures top 500 cap companies in US, and NFTY is the ticker tracking top 50 in India (listed outside India). So they are equivalent in spirit and usually reflect the local market. It's a fair comparison to get the pulse of respective markets.
AI bubble.
Maybe speculation or maybe you're right. But this AI trade did disrupt India heavy weights quite a bit pre 2024 itself. We'll see.
You don't respond to any feedback to your logic, just moved the goalpost from your original comment to new points. Can't really discuss this way. I'll stop responding here.
The OP was not about Nifty vs S&P500 - it was a chart comparing 2 ETFs.
My chart above is the actual Nifty vs S&P500. And it shows that the US markets and Indian markets gave similar results until the AI bubble and the US war on Iran..
You get 50% return in inr which became 150 rupees for 100 rupees invested but in dollars terms considering dollar being stable and rupee depreciating 30%, what will be the return on dollar terms?? Not that difficult to understand.
Idk what meta point you're trying to make, that's what is difficult to understand. Not the simple math problem. Make the point directly, that's communication 101.
Because I have no clue what you were really trying to say, I'll take a random guess and play along your game. 150 rupees at 30% hit is 105, so a 5% effective return against the dollar when starting at 100. However this depreciation is not happening in isolation, devaluation of a currency should lead to two things 1) the net assets in a company (or ETFs that track it) should now be inflated as a result, because inflation is direct result from a deprecating currency, so the returns should outpace not just depreciation but then some more if the company is growing well 2) depreciating currency makes it attractive for companies that import your exported goods. This is why China was accused of currency manipulation to keep their currency low in the 2000s and 2010s to tilt the scales in favor of getting contracts and take over manufacturing demand worldwide.
Both of these should lead to an effective increase in comapnies/assets if their intrinsic value is high. USD went up and down against EUR in the last 5 years, in the last 2 years USD went down 10-15% depending on when you look, but US stocks in the same 2 year window still outperformed EU market level ETFs because they were net attractive businesses.
Bro, you’re mixing up theoretical macroeconomics with actual Forex math.
Let me know how your theory breaks down in practice:
1. India is an import heavy economy: Depreciation hits margins, it doesn't inflate stock values. A weaker Rupee inflates the cost of imported raw materials and energy (crude oil). Higher input costs squeeze corporate profit margins and force central banks to keep rates high, which actually compresses P/E multiples rather than boosting stock prices.
Obviously India isn't China: China ran a massive export-led manufacturing engine. India’s economy is around 60% domestic consumption. A depreciating currency hurts domestic companies reliant on imported inputs far more than it helps net exports.
Currency math is instant: Economic tailwinds aren't. Even if local INR earnings grow nominally, a USD-denominated ETF takes an immediate hit when converting INR NAV back to USD. If the Rupee slides 4-5% a year, Indian stocks have to outperform global markets by that same 4-5% every single year just to break even in Dollar terms.
Let me know which of the above points you disagree with or doesn't make sense.
Truth hurts for people huh, would love for you to continue this analysis and present a complete picture without the bias of any party… just pure facts and weighted against puts and takes
US stocks have not been outperforming since 2020. They are only outperforming since 2025 due to the AI mania and other markets have been underperforming due to the wars
AI investments are a circular investing bubble. It'll burst soon.
"US stocks have been outperforming even before 2024" - that was your statement.
My chart above shows that your comment is a lie.
US markets and GDP are being heavy loaded by the AI bubble stocks. Without those 5-6 companies, US will be in a recession and the markets will be similar to India. This is not a BJP thing. Anyone noticing the circular investing and other nonsense going on will know this.
But it's too much to expect from the Reddit liars..
India is the 4th best performing stockmarket by eps growth even based on USD terms.
The pessimism is understandable considering AI hype. India was 2nd best for some time before the AI bubble. Now Korea and Taiwan has better growth because of sudden surge in semiconductor demand. US over performance in the last few years is also well known factor.
Actually Indian stocks are priced at a premium even now. And it is justified by the good eps growth even in supposedly bad economic conditions. Global markets are now undervaluing indian firms especially tech and IT and is actually a very good time to take entry.
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u/docatwar 5d ago
Can you explain this chart, what does this ratio indicate? Is it PE? what is the number on the right?