A lackluster 2025, when Indian equities lagged global peers, has presented a familiar but more nuanced dilemma for non-resident Indians (NRIs) rethinking their portfolio allocation in the new year.
While the US market posted smart performance last year, led by resilient large-cap technology and AI-linked themes, the Indian stock market’s performance fell short. The
The benchmark S&P 500 rose 16.4% over the course of last year. The Dow Jones Industrial Average gained 13.4% and the tech-heavy Nasdaq rallied 20.5%. In comparison, the Nifty 50 added only 10% and 9%.
Going ahead, analysts believe that allocation to global equities requires a more nuanced approach with a focus on valuations and earnings stability than being focused solely on momentum.
Momentum alone won’t work
“The US remains structurally strong due to profitability, innovation, and balance-sheet quality,” Ross Maxwell, Global Strategy Operations Lead at VT Markets said. “However, elevated valuations in mega-cap tech reduce forward return potential, so more selective exposure is preferable.”
For years, the biggest US technology stocks have delivered a steady stream of riches. But the playbook seems to be shifting in 2026.
According to a Bloomberg report, as S&P 500 remains flat for the year, tech companies in the index are down more than 4%, while energy and materials producers have rallied at least 15%. Producers of household necessities have jumped 13% along with industrial companies.
The disruption has been caused by fears that new artificial intelligence (AI) tools could hurt entire industries, including software firms, insurers, wealth managers, law firms and publishers among other pockets of the economy.
India: Structural overweight, tactical entry
Against this backdrop, Maxwell said that India still justifies a strategic overweight for NRIs as the medium-term earnings visibility remains strong, driven by capex revival, financial deepening, and manufacturing incentives.
Earnings growth is at an eight-quarter high of 14.7%, and indications suggest this recovery will continue in Q4 and gather further momentum in FY27.
Near-term valuations, though, would suggest staggered entry rather than an aggressive all-in allocation, added Maxwell.
Harshal Dasani, Business Head at INVasst PMS, believes that from a risk-reward perspective, India offers a stronger long-term growth trajectory. “Structurally, India’s growth premium remains intact, but near-term returns may be more valuation-sensitive after the sharp run seen over the last few years,” he said. Current Nifty P/E of 22.28 is close to its two-year average.
Currency dynamics: The US edge
Currency considerations play a pivotal role for NRIs. Dasani emphasizes that stable or appreciating US dollars enhance US returns in home-currency terms. In periods of global uncertainty, the dollar often strengthens, acting as a hedge.
He also highlighted that US markets may provide relatively stable returns if global risk appetite weakens.
“If global growth slows, markets with strong domestic demand, and policy flexibility, such as India and Japan can prove more resilient, while the US would remain attractive due to earnings quality and USD strength,” Maxwell also opined.
Therefore, diversification across both markets rather than an all-or-nothing allocation may be the smarter approach this year, balancing growth in India with global exposure in the US.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions.
