Exit Indian Stocks for US Markets? | 29 Years of Data Analysed

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[00:00:25] Your portfolio has probably done nothing for the last 2 years. In fact, Nifty has given a negative 5.5% return from September 2024 till date. Is this painful? Yes. But you know what's more painful? In the same time, S&P 500 gave almost a 30% absolute return, KOSPI gave 155% absolute return and Taiwan Stock Index gave a 94% absolute return.

[00:00:55] You know, there is a beautiful saying that perfectly captures this emotion. I am not afraid of myself. I am afraid of others. I am not afraid of myself. Hey folks, CA Rachana Ranade here and I welcome you all to a very very interesting video wherein we will answer 3 important questions. Number 1, is this the first time that India has underperformed as compared to the US markets? Number 2, given the current situation, is it better to sell your Indian equities

[00:01:23] and park your money in either foreign equities or FDs? And number 3, if a person had stayed invested since the inception of Nifty till the latest September 2024 all-time high, which market would have given better returns? Indian markets or US markets? The video is going to be extremely informative and the last part of the video is also going to have some interesting data points. So keep on watching the video till the end. Now let's get started with answering the very first question that

[00:01:52] what is this the first time that Indian markets are underperforming the US markets? And in fact, you know such questions start popping up, especially during boring trends which are sideways when our portfolio does not move. So first things first, we have to try and analyse how many sideways phases have we seen in the past. For that me and my team, we have pulled up data since Nifty inception that is from 95 almost till date and we have found something really interesting that I would want to share with you.

[00:02:19] Well, you can see sideways written three times. But first I would want to clarify what do I mean by sideways for the purpose of this video. I understand sideways is like absolutely flattish thing, but I would want to take you to trading view first and show you what timeframes have I considered. Now if you have a look at this, this is where Nifty actually started April 96. And you might be like Rachana, how is this possible that there is a data even behind April 96 when Nifty even did not exist.

[00:02:47] Well, trading view has tried to extrapolate that data maybe based on SINSEX. But we will not consider that backdated data. What we will see is let's say if a person might have invested somewhere in April 96, then what happened? The first high since then that it hit was somewhere here. See, so since April 26, this was a low, then a high, then a low. So I have now considered this as a sideways trend. Okay, after this as a sideways trend, what happened is here for a brief timeframe, it went above this.

[00:03:16] But again, it came into the same sideways trend here and ultimately broke above this in April 2003, after which we saw a crazy rally. Okay, of course, we are going to talk about that later. But important point is April 96 to September 2003. This is the sideways trend that I have considered for the first sideways. Now, second and third sideways actually go up very, very cleanly. Sideways again is what I have connected the highs.

[00:03:44] Okay, is there a big dip here? Answer is obviously yes. But what do I mean by sideways for the purpose of this video? I mean to say that it's a point of no returns. If a person might have invested here at let's say 6320, a very similar price level here again in 2010 and a same price level here in October 2003, that's why I'm saying more or less like even if I were to draw something like this, more or less like a sideways here like an anomaly.

[00:04:12] Okay, and the third timeframe that I've taken is this one again, a no point of return August 2018 to October 2020. Again, a big dip here. But again, you can see more or less like a sideways with an anomaly or going outside the range here. So I hope this point in simple words sideways is equal to as good as no returns. Some points may be above that. Some points may be below that. With this, let's get back to where we started.

[00:04:38] So very first point is we are checking from November 95 to September 2003, which was almost an eight years sideways. Of course, we did see big falls. We did see recovery again, fall and recovery. But overall, if I were to connect the highs, it is a sideways trend. What me and my team we have done is we have pulled up entire data from TradingView. So if you want, you can obviously cross check the data. I'm just directly presenting it to you in Excel. Okay, so it was an eight year sideways trend.

[00:05:08] Closing price November 95 base of Nifty was 1000. That's what we have taken. And closing price was 1417. That is nothing but Nifty gave a CHR of 4.45%. That's it. Was US also in a sideways trend back in that time? Not really. Better than us. US S&P 500 performed 6.42% as a CHR. Okay, the next sideways trend we saw was from December 2007 to October 2013.

[00:05:37] Again sideways as in we did saw big correction during the 2008 subprime crisis. Again a recovery, again a correction and recovery. Okay, Mota Moti highs if I connect it was a sideways trend. How many years did this happen for? This happened for six years. Closing price 6138 Nifty to 6,299 Nifty. That's 0.43% CAGR if I'm comparing a timeframe of six years.

[00:06:04] And the CAGR in the same timeframe for US S&P 500 was 3.03%. So again clear out performance. What about the next one? August 2018 to October 2020. Of course, we have a big COVID fall here. But again connecting the highs. In this case also, the sideways trend was for two years. 11,680 to 11,642. In fact, this was a negative 0.16% CAGR for Nifty. And for S&P 500 it was positive 6.15%.

[00:06:34] So what do we understand? Two conclusions here. During sideways or sideways, it's not necessary that it was a sideways. Sideways for US market. In fact, US has outperformed India during all the up cycles. Okay. Number two observation if you can see very clearly. This sideways remained for eight years. This one for six years. And this one for two years. Again, I'm repeating for the last time. Sideways does not mean that it is only a price bound sideway. We have seen big corrections.

[00:07:03] And you know, retracement from the bottom as well. But I'm connecting the highs here. And that's why I'm saying the sideways trend. But I hope both the conclusions are absolutely clear. Now, let's address the second and one of the most important point again. That typically during sideways, investors do get frustrated. And at one point in time, they feel that let me just sell off my Indian equities. And park that money either in maybe FDs or maybe outside India, maybe US equities.

[00:07:32] Would that have made sense in the past is what? Let's check. So, for that have a look at this. Now, if you see here, we have already discussed about sideways, right? Now, let us understand any person who might have gotten frustrated during November 95 to September 03 with a CAGR of only 4.45%. I'm sure a person might have been tempted to sell off the equities and park that money maybe even in FDs, forget about even US equities.

[00:07:58] If a person might have stayed impatient, let's understand what would have happened after that from September 03 to December 7. That is a period of four years. This was the closing, right? 1417. From this level, Nifty climbed up to 6138. That's a CAGR of 44.27%. I'm not saying absolute returns. This is a CAGR of 44.27%.

[00:08:23] And in the same timeframe, US showed a CAGR, that is S&P 500, showed a CAGR of 10.21%. Okay. So anyone who stayed, anyone who invested in 2003 and got out in 2007, that's like a jackpot, but we never hit a jackpot, right? What can we be? What one virtue can we have? That is patience. So let's see, even if a person may have stayed invested from 95 to 2007, done nothing in the

[00:08:53] 12 years, 8 plus 4. In that case, the person would have still seen a rally from 1000 to what? To 6138. That would have still generated a CAGR of 16.32%. And US in that same timeframe had shown a CAGR of 7.67%. Well, now that the concept is clear, I'm just going to move a little bit fast. Again, same old story, six years of impatience, frustration.

[00:09:19] Person may have felt, let me just sell off and put it into equities, put the money from equities into FDs or US equities. Let's see what happened next. From October 13 to August 2018, that's a period of five years. From 6,299, markets went up to 11,680. That's a CAGR of 13.14%. And in the same timeframe, USA gave a return of 10.56%. So again, if a person may have invested in August 13, got out in August 18, wow, but

[00:09:47] we don't even expect that from December 7. Let us say if a person might have waited till August 18, what would have happened? Then December 7 to August 18, that's a period of 11 years. That person might have seen a rally from what? 6,138 to 11,680, correct? So same point and still a CAGR of 6.02%, which I agree is very less. But also remember markets do see some dull periods. We are going to talk about that. And in the same timeframe also, US also gave 6.39% return.

[00:10:15] Now let's talk about the shortest sideways trend from August 18 to August 20. Of course, we had a big Corona dip. Again, let me just remind, we are just joining the upper swing highs maybe, right? So from October 20 to September 24, which is a four-year timeframe from 11,642 to 25,810. Nifty gave a CAGR of 22.02%. US gave a CAGR of 15.22%.

[00:10:43] And that is the reason why if some person may have stayed invested for these six years, that is from what? August 18 to September 24 for a period of six years. That person may have seen a rally from what? 11,682, 25,810, correct? And that would have still fetched a CAGR of 14.13%. And here in the US at 12.12%. So if you have seen typically our sideways, you can see three sideways which I've done in yellow.

[00:11:09] In our sideways, always US has performed better than us. 4.45, 6.42. The second sideways that we saw 0.43, 3.03. 0.16, 6.15. All three major sideways US has done better than us. So let's take a grand finale. What grand finale? If a person might, I know this is too much of patience, but just in case. From November 95 to September 24, if a person may have stayed invested for 29 years, that person would have seen a rally from 1000 to 25,810.

[00:11:39] That still gives a CAGR of 11.86%. Whereas US 8.08%. I know you are going to talk about, oh, this is crazy. How is that even possible? And then, it will be a big deal. But what if an Indian investor has invested in the US market? Then what about the currency impact? That answer we are going to get in the next section of the video.

[00:12:08] Now let's come to the grand finale question that Indian market or US market, which market has given a better return if a person were to stay invested from the start of Nifty in 1995 till the recent high that we saw in September 2024. Of course, you know the answer without rupee depreciation into consideration. But what happens when we take the rupee depreciation into consideration? Let's have a look at this. Now, rupee depreciation in this same timeframe from November 95 to September 24,

[00:12:36] I've directly taken the CAGR that comes to 3.06%. Should I add it up here? No, because if I'm talking about Nifty, it's in rupees only. So, rupee depreciation will not impact anything here. It will be only for US markets. So, now if you consider rupee depreciation, the final return here will still be 11.14% as compared to 11.86%. Of course, if I were to do a finer calculation with rupee depreciation also being compounded,

[00:13:05] still that comes to somewhere around 3.38%. This one, 3.06% then gets converted into somewhere around 3.38%. Still, Indian markets have done better as compared to the US markets. I'm again appealing everyone to go and cross check the data in TradingView. Wherever you feel that there is something that can be added, do let me know in the comments section. But all in all, if you compare what has happened after September 24, then in that case, US has performed better than us. But that's what we understood here.

[00:13:35] That during sideways trend, always US has done better than us. So, don't lose hope in this whole process of investing. And I want to end this video with something you have definitely heard as a dinner table conversation. Typically, people love saying this line that India missed the bus. India missed the internet bus back in that time. And now, the updated version is that India has missed the AI bus. India has missed the semiconductor bus.

[00:14:04] India has missed whichever bus. But honestly, I will admit that it is partly fair, right? We did not build Google. We did not build Nvidia. We'll accept it. But there are certain things worth pondering. We didn't build the internet, agreed. But we ran it. The world built the products and our companies became the people who keep running those products.

[00:14:27] And that single industry, the IT industry went on to create some of the largest wealth this market has ever seen. So, we didn't miss that bus. We were in fact driving it. Number two point is that our market is more of a consumption driven story is what I believe. Be it banks, be it cars, cement, paint, insurance, hospital, consumer companies. All these grew because Indians started earning more and spending more.

[00:14:56] So, the consumption bus is a totally interesting bus that many people should definitely take a look at at least. And ultimately, the third and most important bus from the stock market perspective is that we started funding our own market. See, 20 years ago when foreign investors sold, our market simply fell. Today, when they sell, there is a good chance your SIP is there on the other side of the trade.

[00:15:22] Your monthly installment has quietly become a shock absorber for the entire stock market. So, did we miss the bus? Maybe. Maybe one or two. But we caught few others. And those are the ones that compounded. And that takes me right back to where we started. 16 out of 29 years, this market went nowhere.

[00:15:45] Which means 16 of those years, somebody was sitting at the dinner table and saying, India has missed the bus. They said it in 1998. They said it in 2011. They said it in 2019. And they will say the same thing in 2026 as well. The buses kept coming and the buses kept going. The point is that were you patiently invested in that bus?

[00:16:10] That's a very nice saying, which says that the marquist, quietest phases can sometimes lay the foundation for its biggest moves. So, my only request to you is that don't get down during the flat years. This is when the ticket is cheapest and the ride feels most pointless. You don't have to catch every bus. You just have to stay seated in the ones you are already in.

[00:16:38] I hope that was a lot of gyan from my side today. I hope you enjoyed today's video. If you did, please don't forget to smash the like button. Please don't forget to share this video with your friends. I'll see you in the next one. Stay invested. Till then, take care. Cheehin. And bye-bye. You might have come across such advertisements on various social media platforms. Please note, all of these are fraudsters promising unbelievable returns through Stock Tips. I don't provide any calls or advisory services.

[00:17:06] I provide only educational content through my social media handles and through my website, rachanaranade.com and rachanaranade.in.