April has been a volatile month in global markets. The S&P 500 is down 4% for the month on fears of slowing AI capex, the Stoxx 600 is flat, and Chinese equities have rallied 6% on fresh stimulus. India has held up relatively well, with the Nifty down just 1.2%. Here's what's driving it.
The US AI correction
US tech giants have led global markets for three years straight on the back of AI infrastructure spending. In April, several hyperscalers guided more conservatively on FY27 capex, triggering a 8–12% drawdown in names like Nvidia, AMD, and Broadcom. The concern: if the AI capex cycle slows, the entire supply chain from chips to cooling to power feels it.
European stagnation
Eurozone GDP grew 0.3% in Q1 2026, barely above stall speed. The ECB cut rates to 2.50% in March but consumer demand remains soft. European equities trade at historically cheap multiples, but cheap has stayed cheap for a while now.
China's stimulus surprise
China announced a larger-than-expected fiscal stimulus package targeting real estate and consumer durables. MSCI China is up 14% year-to-date, though it remains in a long bear market from 2021 peaks. Whether this becomes a durable rally or another head-fake depends on real estate stabilization.
India's relative strength
India has several tailwinds: stable inflation, positive earnings growth, strong domestic flows into mutual funds (SIP inflows hit ₹27,500 crore in March), and low correlation with US tech volatility. FPI flows have been modestly positive, and domestic institutional investors continue to buy the dips.
The risks
A deeper US recession would drag Indian exports (IT services especially). A sharp dollar rally would pressure FPI flows. Oil spiking above $95 would hurt the macro picture. None of these are base cases, but all are plausible risks to monitor.
What to do as an SIP investor
Nothing. Keep SIPping through volatility. Global drawdowns are exactly when long-term compounders benefit from rupee cost averaging. The investors who panic-sell during volatility months are the ones whose returns fall meaningfully below fund returns over time. Discipline beats cleverness over 10-year horizons.