WHY US MARKET MAY NO LONGER BE THE BEST GLOBAL BET FOR INDIAN INVESTORS

Indian investors have long focused on the US for global diversification and for good reason. Over the past decade, US equities outperformed, delivering over 19% compund annual growth rate (CAGR) in USD, driven by a booming tech sector.

- PRATEEK A CHATURVEDI

But the narrative is shifting. After a strong start to 2025, US markets are facing turbulence. President Donald Trump's new trade barriers and tariff threats have rattled sentiment, with no resolution in sight. Consumer confidence took a hit, seeing its steepest fall since August 2021. The expectations index fell below June 2024 levels, while 12-month inflation expectations rose from 5.2% to 6%.

Despite the market turmoil, core economic indicators remain stable. A rebound could come if Trump eases tariffs (Trump Put) or the US Fed cuts rates (Fed Put). However, policy uncertainty is weighing on spending, signalling an economic slowdown. With stretched valuations, US equities face a tough road ahead.

Europe's big moment

On the other side of the Atlantic, major macro tailwinds are playing out for European equity markets, including interest rate cuts by European Central Bank (ECB), increased defence spending, removal of budgetary brakes by the German government, and the potential of the war ending in Ukraine.