US Market Rally Hurts India: Why Tech Boom Leaves Indian Stocks Behind

• US markets, including S&P 500 and Nasdaq, hit record highs in early 2026, fueled by strong buying in tech, AI infrastructure, and semiconductor stocks, partly due to the US occupation of Venezuela.
• Indian markets have delivered significantly lower returns compared to the US, Japan, and other emerging Asian markets, making India a 'reverse AI trade' example that missed the global AI capex boom.
• High valuations, sluggish earnings growth, and declining foreign investment have hampered Indian market performance, with foreign funds favoring AI-related stocks in the US.
• Domestic institutional investors have been crucial in preventing Indian market declines by buying on dips, but this approach limits potential for a strong rally during global risk periods.
• Future performance for India hinges on the US Federal Reserve's dovish monetary policy; a weaker dollar and increased global liquidity could drive investors back to emerging markets like India.

Why It Matters: US tech-driven rally highlights India's market struggles; future depends on global liquidity and domestic demand.