The narrative for the Indian equity market is turning bearish, evidenced by the back-to-back downgrades by several global brokerages and the relentless selling by foreign portfolio investors as geopolitical tensions and crude oil prices above $100 threaten to dent India’s macros.
The US-Iran war has effectively blocked the Strait of Hormuz, a critical chokepoint that accounts for 20% of the world’s energy needs, driving up crude oil prices. Since the beginning of the year, Brent crude has nearly doubled to around $120 per barrel.
For India, which depends on imports for 85% of its energy needs, this is a significant blow. Global brokerages have taken cognisance of this development, prompting them to lower Nifty targets, cut earnings expectations, and downgrade market stance, signalling risk aversion to Indian stock markets as valuations don’t justify the current risks.
From JP Morgan, HSBC, Nomura to Goldman Sachs, the Indian stock market is no longer on anyone’s wish list.
At the same time, selling by ₹191,969 crore”>FPIs hit a record ₹191,969 crore year-to-date (YTD), with ₹60,847 crore worth of additional outflows in April after a massive ₹117,775 selloff in March and ₹35,962 crore in January. February was the sole month when FPIs were buyers of Indian stocks so far in 2026.
Time to add global exposure to portfolios?
For retail investors, who have remained bullish on the India story despite a dismal performance by the Indian stock market, the need is to eliminate “home country bias” and opt for global diversification.
Nifty 50 declined 11.31% in March as the US-Iran war raged on, but retail conviction did not waver as equity fund and SIP inflows remained healthy. In the absence of retail buying, the decline could have been worse for the index. Meanwhile, over two years, the index has seen a mere 2.6% increase.
In dollar terms, Nifty is near-flat to negative over the past two fiscal years, while the MSCI Emerging Markets index surged 31% in FY26 mainly on the back of South Korea, Taiwan, and China, which posted gains of 14% to over 100%. The S&P 500 has also compounded strongly.
Experts believe that while the long-term India story remains intact, the argument for global diversification is getting stronger.
“Investing globally is no longer just about seeking higher returns; it is a critical strategy for geographic alpha and currency hedging. While the Indian market has struggled with domestic inflation, global indices have captured the massive value creation in the AI theme,” said Santosh Meena, Head of Research at Swastika Investmart.
He believes that adding foreign exposure allows you to participate in “pure-play” tech leaders that aren’t available on the NSE, while the rupee’s depreciation acts as a natural performance booster for USD-denominated assets.
Analysts also argue that taking exposure to global stocks does not mean that India has failed. It is that concentrating your entire equity portfolio in one country — even a high-growth one — creates unnecessary, single-country risk, said Tanvi Kanchan, Associate Director, Anand Rathi Share and Stock Brokers.
She highlighted India’s domestic institutional framework of 21 crore demat accounts, upwards of ₹30,000 crore in monthly SIPs, DII ownership surpassing FPI, suggesting that the long-term case for India equities is stronger than it was five years ago. However, oil shocks, geopolitical events, monsoon variability, and electoral cycles — these are India-specific risks that a globally diversified portfolio naturally smooths out, according to Kanchan.
How to build a global equity portfolio?
Analysts recommend building this portfolio over 12-24 months and treating it as a “satellite” portfolio that reduces downside risks overall.
The worst time to start global investing is panic-selling India at corrected levels to chase markets that have already run, while the right approach is systematic, patient, and disciplined.
Analysts suggest an allocation of 5-15% depending on the risk appetite. This will ensure that if India goes through a phase of volatility, as it clearly is right now, the entire portfolio isn’t moving in lockstep with the Nifty, while fundamentally bullish on India for the long term, and that conviction hasn’t changed, according to the Anand Rathi expert.
Meanwhile, Meena suggested a global allocation of 10–15%, recommended specific funds like Motilal Oswal Nasdaq 100 FoF or Navi Nasdaq 100 FoF for low-cost, passive exposure to the US tech giants driving the AI revolution.
For active management with a broader scope, the Edelweiss US Technology Equity FoF (investing in the JP Morgan US Tech Fund) has shown strong historical CAGR, he said, adding that for those seeking stability beyond just tech, ICICI Pru US Bluechip Equity Fund offers exposure to high-quality, stable global leaders.
Meanwhile, Kanchan recommended an S&P 500 Index Fund for the broad US market exposure as it tracks 500 of the largest US companies across technology, healthcare, financials, and energy.
“Passive, low-cost, and genuinely diversified, a Nasdaq 100 Index Fund gives you Apple, Microsoft, Nvidia, Alphabet, and Amazon in one vehicle. These suit investors with a 7+ year horizon who understand concentration in tech amplifies both upside and downside,” she said.
Apart from investing in US stocks, she suggested an Emerging Market Fund as it gives you broader EM exposure, which is useful if you want to spread across developing economies.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
