Home to some of the best stocks in the world, like Google, Facebook, Apple, General Motors, and more, the US stock market allows Indian investors to grow and diversify their portfolios.
Similar to the Indian stock exchanges – NSE and BSE – the NASDAQ and NYSE are two of America’s biggest stock exchanges. But have you ever wondered how to invest in US stocks from India? This article is an in-depth guide for your curious queries on US stock investments as an Indian.
Yes, Indians can invest in US stocks from India with more options available to hold and buy stocks for their portfolio. These options include mutual funds, ETFs, direct equities, and more.
How to Invest in the US Stock from India?
So, how to invest in the US stock market from India? There are two ways in which you can start your investment from India itself:
Direct investments in the US stock market are possible by opening an overseas trading account with a foreign or domestic broker. Here’s how you can do that:
As an investor in India, you may be interested in diversifying your portfolio by investing in the US stock market. To do so, you will need to open a trading account with a domestic broker that has access to the US stock market. This can be done easily and securely through online platforms. The first step is to choose a domestic broker that offers international trading services. Look for brokers that have partnerships with foreign brokers or exchanges, as this will make it easier for you to invest in US stocks from India.
Once you have chosen a broker, you will need to provide personal information such as your name, address and identification documents. However, this facility has some restrictions based on the broker you choose. Depending on the broker, you may get some limits on the number of investments you make or the investment vehicles you choose. Another thing to consider is the investment cost, which increases due to currency conversion charges and brokerage.
Direct investments are also possible with a foreign broker who has a presence in India. Opening a trading account with a foreign broker is an excellent way for investors in India to invest in the US stock market. With technological advancements and increasing globalisation, it has become easier than ever before for Indian investors to access international financial markets. Opening a trading account with a foreign broker is simple and straightforward, but it requires careful consideration and research.
NSE IFSC is a subsidiary of the National Stock Exchange (NSE), where you will need a new Demat account and an IFSCA licensed broker to invest in US stocks.
You can also invest in US stocks from India through indirect investments in two ways. Here’s how:
Several mutual funds invest in US mutual funds or stocks, and these indirect investment options don’t require you to maintain a minimum deposit on your new overseas trading account. This is a better option for people who don’t want to face the hassle of approaching stockbrokers who offer direct investments.
US stock investment from India is also possible through ETFs in two ways. The first way is to purchase an ETF through a foreign or a domestic stockbroker, and the second way is by getting an Indian ETF with international indices. These are more favoured investment options since they have a lower expense ratio.
Under the Liberalised Revenue Scheme (LRS), the RBI (Reserve Bank of India) permits an Indian to make a yearly investment of up to $250,000 (around ₹2 Crore) without taking any special permissions.
There are so many reasons why as an Indian, you shouldn’t be scared to invest in US stocks. Here’s why:
By diversifying your portfolio, you reduce your risks of being affected by market-related fluctuations. Investing in some US stocks can help you achieve that diversification and decrease the economic risks.
Biggest global companies like Apple, Google, Starbucks, Nike, and more are from the United States, making the capitalisation of the US equity market reach about $47.32 trillion. Investing in such companies can expand your approach in the stock market.
One of the main reasons why Indian investors hesitate to invest in the US stock market is because most of them are expensive. For example, Apple stock is currently at $164, around ₹13,443, and Amazon stock is $102 (around ₹8,360). But the best part about investing in US stocks is that you can have fractional shares. If you have ₹20,000, you can invest ₹5,000 in four US companies, enabling you to expand your investment portfolio.
Living in a world of innovation, where the US has been the centre of it with brilliant minds and resources, there’s no doubt that US companies are innovative with a promising segment of innovation in biomedicine, AI, and robotics. Investing in US stocks helps grow your wealth and tap into your full potential.
The USD to INR exchange rate is ₹81.98 (dated 10th April 2023), and it’s only increasing rapidly. Investing in US stocks from India allows you to invest not only in the stock but also in the value of the dollar. So, every time the dollar value increases compared to the rupee, your investment value also increases.
While investing in the stock market is a game of risk, the American stock market has shown lesser swings than the Indian stock market. It is known to be lesser volatile due to its manageable changes and relative stability.
The Liberalised Remittance Scheme (LRS) by RBI allows investing about $250,000 (₹2 Crore) yearly. So, as an investor, you can invest in US real estate, financial securities, deposits, and more within the permitted yearly limit.
There is a dividend tax for foreign investors in US stocks. The stocks have a dividend tax of 30%, but since there’s a tax treaty between the US and India, Indian residents who want to invest in US stock have a tax of 25%. Further, you can claim this as Foreign Tax Credit when filing your taxes.
A US brokerage account can allow you to invest in US stocks from India. But these accounts come with annual maintenance fees, joining fees, and charges for every trade. You need to check your agent’s terms and conditions.
Lastly, aligning your investment strategy with your investment goals is important. For example, you should invest in ways that align with your life goals, like building a corpus for retirement, funding your child’s education, or relocation.
1. Is it legal to buy US stocks in India?
Yes, investing in US stocks from India is legal as long as you stay within the set LRS yearly limit.
2. Can I invest in NASDAQ from India?
Yes, you can invest in NASDAQ in two ways: direct and indirect investment. The direct route allows you to open a trading account through a foreign or domestic broker. The indirect investment route allows NASDAQ investment through ETFs and mutual funds.
3. What are the major exchanges in the US?
The NYSE (New York Stock Exchange) and NASDAQ Stock Market are the major stock exchanges in the US.
4. Can I buy US stocks from NSE?
Yes, a retail investor in India can buy a US stock from NSE through the NSE IFSC exchange.