Indian equities have emerged as one of the weakest-performing major markets in 2026, according to Bank of America's (BofA) latest 'The Flow Show' report. Data from BofA indicates that India's stock market has fallen 9.1% year-to-date in US dollar terms as of August 19, 2026.
This underperformance stands in stark contrast to the robust gains observed across several other leading global markets. US equities have climbed 13.3%, while Japan's market surged 18%. The broader emerging-market equities index also advanced significantly by 20.6% during the same period. Even European and UK equities delivered positive returns, gaining 12.2% and 12.4% respectively.
India's Underperformance Detailed
India's performance also trails several key Asian markets. Japan recorded an 18% increase, while South Korea and Taiwan were particularly strong, with gains of 77.6% and 58% respectively. China, however, also experienced weakness, with its equities down 8.1% in dollar terms. The overall asset-class picture further highlights this divergence:
- Korea equities: +77.6%
- Taiwan equities: +58.0%
- Japan equities: +18.0%
- Emerging-market equities: +20.6%
- US equities: +13.3%
- UK equities: +12.4%
- Europe equities: +12.2%
- Gold: +3.4%
- China equities: -8.1%
- India equities: -9.1%
- Oil (WTI): +49.5%
- Industrial metals: +13.8%
Oil was the top-performing major asset, with WTI crude up 49.5% and Brent crude up 50.6%, while the broader commodities basket gained 63.4%.
Capital Flows Reveal Investor Shift
The weakness in Indian equities has coincided with a notable shift in investor capital. BofA's data shows that India recorded equity outflows of $10.5 billion year-to-date. This is in sharp contrast to the substantial inflows attracted by other developed markets, with the US drawing $433.6 billion and Japan $21.6 billion in equity investments.
Despite strong global equity inflows totaling $40.1 billion in the latest week, emerging markets collectively registered $0.4 billion in outflows. On a year-to-date basis, emerging market equities as a group experienced $45.3 billion in outflows. This indicates that India's dollar-denominated underperformance is not merely a reflection of global risk aversion but also points to investors actively reallocating capital towards developed markets and select other emerging market opportunities.
The figures underscore a significant divergence in global equity performance for 2026, with India trailing numerous major markets even amidst a generally strong global appetite for equities.