Emerging markets lag US stocks in 2026: What India's equity market and FPI flows reveal
The Nasdaq 100 has gained 22.7% in 2026 as of October 9, while the S&P 500 has risen 15.1%. Emerging-market stocks have returned 11.5%, while developed international markets have gained 9.4%.
- Oct 13, 2026,
- Updated Oct 13, 2026 1:35 AM IST
Emerging-market stocks have gained 11.5% in 2026, falling behind US markets as American equities continue to deliver stronger returns. The gap raises an important question for India: are global investors finding US stocks more attractive, and what could this mean for Indian markets and foreign investment flows?
Data compiled by YCharts and shared by market commentator Charlie Bilello shows that the Nasdaq 100 has gained 22.7% in 2026 as of October 9, while the S&P 500 has risen 15.1%. Emerging-market stocks have returned 11.5%, while developed international markets have gained 9.4%.
The figures show that US stocks have outperformed several other global markets this year. However, emerging markets include countries such as India, China, Taiwan and Brazil. Their combined performance does not tell us how India's stock market has performed on its own.
Why this matters for India
One key question is whether Indian stocks have kept pace with US markets. To understand this, investors need to compare the Nifty 50 and Sensex with the S&P 500 and Nasdaq 100 over the same period.
Foreign portfolio investors (FPIs), who invest in Indian shares and bonds, are another important factor. When global investors see better opportunities in the US, they may move some money away from emerging markets. Such decisions can put pressure on Indian share prices, particularly large companies in which foreign investors hold significant stakes.
However, weaker returns compared with US stocks do not automatically mean that foreign investors are losing confidence in India. Investors also consider company earnings, share valuations, economic growth and future business prospects before deciding where to put their money.
Domestic investors can also help support the market. Indian mutual funds, insurance companies and other domestic institutions may buy shares even when foreign investors are selling. The balance between these two groups can influence the direction of the market.
How the rupee and oil prices affect investors
Currency movements also matter. If the rupee weakens against the US dollar, foreign investors may earn less when they convert their Indian investment returns into dollars. This means that even if Indian stocks rise, the gains for overseas investors could be smaller after accounting for currency changes.
Crude oil prices are another factor to watch. India imports a large share of the oil it consumes. Higher oil prices can increase costs for businesses, put pressure on inflation and weaken the rupee. However, the impact varies across industries, with some energy companies potentially benefiting from higher prices.
These factors can influence how international investors view Indian equities, but the global performance figures alone do not establish that currency movements, oil prices or foreign selling have caused India's relative performance.
What investors should watch next
The gap between US and emerging-market returns is a reason to examine where global investment money is moving. For India, the key indicators are the Nifty 50 and Sensex returns, monthly FPI buying and selling, domestic institutional investment, rupee movements and corporate earnings.
If US stocks continue to outperform, India may face stronger competition for foreign investment. But the longer-term outlook will also depend on India's economic growth, company profits and share valuations.
The central question is whether the performance gap is temporary or signals a longer-lasting preference for US stocks. The answer will depend on how these factors evolve over the coming months.
Emerging-market stocks have gained 11.5% in 2026, falling behind US markets as American equities continue to deliver stronger returns. The gap raises an important question for India: are global investors finding US stocks more attractive, and what could this mean for Indian markets and foreign investment flows?
Data compiled by YCharts and shared by market commentator Charlie Bilello shows that the Nasdaq 100 has gained 22.7% in 2026 as of October 9, while the S&P 500 has risen 15.1%. Emerging-market stocks have returned 11.5%, while developed international markets have gained 9.4%.
The figures show that US stocks have outperformed several other global markets this year. However, emerging markets include countries such as India, China, Taiwan and Brazil. Their combined performance does not tell us how India's stock market has performed on its own.
Why this matters for India
One key question is whether Indian stocks have kept pace with US markets. To understand this, investors need to compare the Nifty 50 and Sensex with the S&P 500 and Nasdaq 100 over the same period.
Foreign portfolio investors (FPIs), who invest in Indian shares and bonds, are another important factor. When global investors see better opportunities in the US, they may move some money away from emerging markets. Such decisions can put pressure on Indian share prices, particularly large companies in which foreign investors hold significant stakes.
However, weaker returns compared with US stocks do not automatically mean that foreign investors are losing confidence in India. Investors also consider company earnings, share valuations, economic growth and future business prospects before deciding where to put their money.
Domestic investors can also help support the market. Indian mutual funds, insurance companies and other domestic institutions may buy shares even when foreign investors are selling. The balance between these two groups can influence the direction of the market.
How the rupee and oil prices affect investors
Currency movements also matter. If the rupee weakens against the US dollar, foreign investors may earn less when they convert their Indian investment returns into dollars. This means that even if Indian stocks rise, the gains for overseas investors could be smaller after accounting for currency changes.
Crude oil prices are another factor to watch. India imports a large share of the oil it consumes. Higher oil prices can increase costs for businesses, put pressure on inflation and weaken the rupee. However, the impact varies across industries, with some energy companies potentially benefiting from higher prices.
These factors can influence how international investors view Indian equities, but the global performance figures alone do not establish that currency movements, oil prices or foreign selling have caused India's relative performance.
What investors should watch next
The gap between US and emerging-market returns is a reason to examine where global investment money is moving. For India, the key indicators are the Nifty 50 and Sensex returns, monthly FPI buying and selling, domestic institutional investment, rupee movements and corporate earnings.
If US stocks continue to outperform, India may face stronger competition for foreign investment. But the longer-term outlook will also depend on India's economic growth, company profits and share valuations.
The central question is whether the performance gap is temporary or signals a longer-lasting preference for US stocks. The answer will depend on how these factors evolve over the coming months.