India’s stock market has lagged behind peers in 2026, with a 9.1% decline in dollar terms amid widespread outflows and a commodities-driven global rally, highlighting a shift in investor sentiment and regional disparities.
Indian equities have lagged far behind many global markets in 2026, with Bank of America data showing a 9.1% decline in dollar terms as of 19 August. That leaves India among the weaker major equity markets this year, even as investor appetite for stocks has remained firm in other parts of the world, according to Business Today’s report on the bank’s latest table. In the same period, US equities were up 13.3%, Japan 18%, and emerging-market equities 20.6%.
The gap is even wider in Asia. Korea has surged 77.6% and Taiwan 58%, while China has also struggled, with equities down 8.1% in dollar terms. That leaves India looking distinctly out of step with the region’s strongest performers, despite its size and long-standing appeal to foreign investors. Earlier Business Today coverage this year also noted that no Indian stock featured among the world’s top 100 performers in the 2026 rally, underscoring how broad the underperformance has been.
The weakness has been accompanied by a pullback in capital flows. Bank of America’s data shows India recorded $10.5 billion of equity outflows year to date, while the US drew $433.6 billion and Japan $21.6 billion. Emerging markets as a group saw $45.3 billion of outflows over the year to date, and the latest week still brought $0.4 billion of outflows from EM equities even as global equity inflows stayed strong. Business Today has previously linked the pressure on Indian assets to foreign selling, elevated valuations and softer earnings expectations.
The broader market backdrop has also been unusual. Commodities have outpaced equities in many cases, with oil the standout. Brent crude has risen 50.6% this year and WTI 49.5%, while the broader commodities basket has climbed 63.4%; industrial metals are up 13.8% and gold 3.4%. Against that backdrop, India’s equity market is not just underperforming the US and parts of Asia, but also missing out on a year in which global investors have clearly favoured a narrower set of markets and assets.
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