What is the best way to invest in US stocks from India?

Introduction

Did you know that you can invest in US stocks from India? Similar to the BSE and NSE in India, major US exchanges like the New York Stock Exchange (NYSE) and the NASDAQ are the destinations to buy and sell US stocks. These exchanges have indexes that track the performance of the stock market.

When it comes to investing, diversification is key, as you may already know. Geographical diversity is a factor that is important to consider, even if it typically refers to spreading your capital throughout different asset classes.

Thanks to a variety of investment choices, buying US equities from India and taking part in the action on the US stock markets is now simpler than ever. Stock traders and investors alike have a variety of brokerages to choose from to invest in US stock markets.

Let’s discuss how we can invest in US stocks from India.

There are two ways to invest: 

• Indirect Investments
• Direct Investments

Indirect Investments

Indirect investments are when you do not invest directly but hold an indirect authority on US stocks. Here are some ways to do that:

Investing Through Apps

Since developing mobile apps for various services, several start-ups have introduced apps to support Indian investors investing in the US financial markets. Some apps may not permit intraday trading outside India in the US market due to legal limitations.

Mutual Funds

Those wishing to use mutual funds to invest in US stocks have many choices. Unlike some stockbrokers who provide direct international investments, you need not open an offshore trading account or maintain a minimum deposit.

Exchange-Traded Funds

Investing in ETFs is another way to get exposure to US stocks. ETFs are useful in both direct and indirect ways. You can buy US ETFs through a domestic or foreign broker or an Indian ETF of a global index.

Direct Investments

By opening an international trading account with a domestic or global broker, you can invest directly in the US stock market. Consider the fees and brokerage before selecting the best app to invest in US stocks from India.

Opening a Foreign Broker’s Overseas Trading Account

An overseas broker with a foothold in India is another option for opening a trading account for international markets. Before opening the account, know the fees, terms, and conditions. Therefore, do your homework before choosing the most suitable broker to buy US equities from India.

Opening a Global Trading Account with a Domestic Broker

Many domestic brokers partner with US stockbrokers and carry out your trades as intermediaries. With any such broker, you can set up an international trading account. To open this account, you might need to provide several papers.

Depending on the brokerage business, you might be subject to limitations on the types of investment you can use or the number of trades you can execute.

In direct investments, investment can be expensive due to brokerage and currency conversion fees. Therefore, before opening an account, ensure you know all the charges.

The Investment Cap for US stocks

You can invest up to $2,50,000 (about 192.5 lakh) as per the limit set by the Reserve Bank of India under the Liberalised Remittance Scheme.

Reasons to Invest in US Stocks

Why invest in US stocks when there are so many Indian companies delivering strong growth is a common question from investors. The following are some advantages of buying US stocks:

Portfolio diversification

You can diversify and expand your investment exposure to the US economy by investing in US stocks, which can help reduce economic risks.

Possibility of Investing in High-Value Companies

The US is leading the way in innovation in terms of technology, pharmaceuticals, and industrial firms. Indian investors can profit from the gains earned by these high-potential, progressive enterprises by investing in US stocks.

Benefit from Dollar Appreciation

The typical exchange rate between the USD and INR in 2011 was about INR 47. An investor would have made a 36 percent profit from currency gains alone if the exchange rate in 2020 had been at Rs. 74.

Conclusion

You can further diversify your portfolio by enabling yourself to explore US stock trading from India and making investments in international marketplaces. Analysing stocks, researching, and making transactions have never been easier because of the availability of information.

Disclaimer: ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103) and Member of Multi Commodity Exchange of India Ltd. (Member Code: 56250) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Ms. Mamta Shetty, Contact number: 022-40701022, E-mail address: complianceofficer@icicisecurities.com. Investments in securities markets are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.