Difference Between the Indian Stock Market and US Stock Market

The Indian and US stock markets are two of the most influential financial markets, alongside China and Japan, attracting investors from around the world. In fact, India surpassed Hong Kong at the start of 2024, becoming the fourth largest stock market. 

Both Indian and US stock markets offer investing opportunities but they operate under different regulatory frameworks and exhibit distinct characteristics. While you could invest in either, you must first compare the US stock market vs the Indian stock market to understand their differences.

The Indian stock market comprises two major exchanges, namely the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Whereas, the US stock market is home to major exchanges such as:

• New York Stock Exchange (NYSE)

• National Association of Securities Dealers Automated Quotation System (NASDAQ)

Here are the key differences between the US stock market and the Indian stock market: 

When you invest in US stocks, you can earn dividends from companies that distribute profits. Since this is included under income, you will be subjected to a 25% tax in the US, according to the India-US Double Taxation Avoidance Agreement (DTAA). 

The other criterion relates to the capital gains you earn when you sell your US stocks. For long-term capital gains, wherein you sell units after 24 months of holding, the tax rate is 20%. Alternatively, for short-term capital gains, your profits are added to your income and taxed at the income tax slab rate.  

Both the stock markets are unique in their own way, and provide you with opportunities for wealth generation. As such, understanding these differences is crucial to capitalise on the opportunities they offer.