You must have heard about NSE and BSE – India’s two most prominent stock exchanges. You can trade Indian stocks on these platforms every day. Similar to NSE and BSE, there are NYSE (New York Stock Exchange) and NASDAQ – US stock exchanges.
Along will asset class diversification, you can also try geographical diversification. And for that, you can consider investing in stocks of foreign countries like the US. The following sections will discuss how to invest in US stocks from India.
Can Indians invest in the US stock market?
Yes, Indians can invest in the US stock market. There is more than one way to buy and hold US stocks in your portfolio. Direct equities, ETFs, and mutual funds are just one of the few popular options.
You can invest in US stocks in two ways from India – indirect and direct.
Direct investment options
There are two options when it comes to direct investment methods:
- Global trading account with domestic agent
Many domestic brokers work as intermediaries for your trades by collaborating with US stockbrokers. You can open an international trading account with any one of these brokers. You might need to submit many documents to open this account.
Depending on the brokerage firm, you can be subject to restrictions on the kinds of investments you can utilise or the number of trades you can conduct.
- Overseas trading account with a foreign broker
Another choice for setting up a trading account for international markets is an international broker having a presence in India. Be aware of the costs and terms before opening the account. Therefore, conduct your research before selecting the best broker to purchase US stocks from India.
Direct investment costs may be high because of brokerage and exchange rate charges. So, make sure you know all the expenses before opening an account.
Indirect investment options
- Mutual funds
Through international mutual fund programmes, there are prospects for overseas investments. Some of these mutual funds track various indices for different countries in Asia or South America; most funds track the US market.
- Exchange-traded funds
Unlike mutual funds, Exchange-Traded Fund (ETF) units are traded on the stock market throughout trading hours. So you can buy and sell ETF units in the exchanges while it is open in the same way that you would buy and sell stocks.
You are eligible to trade ETFs if you have a Demat account with any brokerage house. Many ETFs provide access to NASDAQ and various other important international indices. You can use a domestic or international broker and an Indian ETF of a worldwide index to purchase US ETFs.
- Investment apps
Several start-ups have released mobile apps to assist Indian investors in making investments in the US stockmarkets.Due to regulatory restrictions, some apps might not allow intraday trading in the US market outside India. So, find out some of the best apps to invest in US stocks from India and choose your option to proceed with the investment.
How can I buy US stocks in NSE India?
Before,there were only two ways to buy US stocks: through international mutual funds that buy stocks from other countries or through a US-registered broker. Investing in top US equities on the NSE IFSC (International Financial Service Centre) Exchange is your third alternative right now.
The NSE IFSC exchange is located in Gujarat’s GIFT City (Gujarat International Finance Tech City), and starting from March 3, 2022, Indian retail investors can trade US stocks there.
Eight US stocks are currently available for purchase on the NSE IFSC Exchange. They are - Microsoft, Netflix, Apple, Amazon, Walmart, Alphabet (Google), Meta Platforms (Facebook) and Tesla. This number will rise to 50 US stocks, which will be gradually added to the market. The exchange's trading hours will be the same as those of the NYSE (New York Stock Exchange). Therefore,the NSE IFSC trading hours are from 2:30 pm to 8 pm IST.
Your domestic Demat account will not work for trading these stocks. You will need to open another special Demat account. Here is how:
- Open a trading and Demat account with a broker registered with the IFSC. Get in touch with your existing broker affiliated with NSE IFSC to find out if there are any requirements you need to satisfy before you can begin trading US equities on the global exchange.
- You should transfer funds from your Indian bank account to the broker's IFSC-registered account. Currency conversion is required to invest in NSE IFSC US stocks because deals on the exchange are made in dollars instead of Indian rupees. Once your money has been sent to the account of the IFSC-registered broker, you can begin trading in US stocks listed on the market.
Now that you have gathered knowledge on how to invest in US stocks from India, you can start trading. But you should do your proper research on types of risks and regulations associated with the same before investing.
