Disclaimer: All investments are considered high risk. Therefore, you should consult a professional before investing in anything. This article and its content are for general information purposes only and do not constitute financial advice in any way.
NSE and BSE are the major stock exchanges in India. Similarly, NYSE (New York Stock Exchange) and NASDAQ are the prominent stock exchanges in the US. S&P 500, NASDAQ Composite, and Dow Jones Industrial Average are the major indexes that list the US stocks. In India, we have SENSEX and NIFTY as the major indexes.
You can invest in selected US stocks from NSE IFSC which is a subsidiary of NSE (National Stock Exchange) in India. This subsidiary operates in GIFT i.e. Gujarat International Finance Tec-City and has the permission to trade in various securities that are available in foreign currencies. When it comes to US denominated trading, you can invest in stock derivatives, commodities, debt securities, and index derivatives as of now.
Earlier, to invest in US Stocks, investors had to connect with online stockbrokers who have permission from the regulators in the US and India to provide these services. However, as NSE IFSC was launched in March 2022, investors were able to trade in 8 selected US stocks without consulting the registered brokers. Today, NSE IFC will allow Indian investors to trade/invest in as many as 50 US stocks. These stocks include the stocks of popular US companies like Walmart, Apple, Tesla, Microsoft, Google, and Facebook.
You will receive an NSE IFSC receipt upon investing in these US stocks. This receipt will be a depository receipt of unsponsored nature which signifies that it will be a derivative product. The authority to issue these receipts has been given to HDFC Bank IBU. With NSE IFSC, you get the option to invest in US stocks from India in the same way as you invest in the stocks listed in the Indian Stock Exchanges. The stocks purchased through NSE IFSC will be credited to your Demat account in T+3 days.
How to invest in expensive US stocks?
As the US currency has a much higher value than the Indian currency, you need to spend a huge amount of money to buy US stocks. For instance, a single stock of Amazon is listed at USD 2216 currently. It means that you need to invest over Rs. 1.5 lakhs to buy one stock of Amazon. However, with NSE IFSC, you don’t have to invest such a huge sum. It allows you to be a fractional owner of this stock. It means that you don’t have to buy the entire stock but a fraction of it each time you invest in US stocks.
Paperwork required to invest in US stocks
To invest or trade US stocks from India, you need to fulfill the RBI’s criteria when it comes to buying USD to trade in US-based stocks. You will need to convert Indian rupees into dollars from the bank account you have opened in India. Indian residents are allowed to remit USD 2.5 lakhs per year. As per the current value of USD in INR which is INR 77.51 per USD, it comes to around 1.92 crores.
Investing in US stocks can be a good decision as it will allow you to diversify your investment portfolio. However, you must have enough knowledge about US stocks and the current market trends in the US to be able to earn a good profit by investing or trading in them. Also, you can avail of the services of an experienced broker who has enough experience of handling US stocks. It is recommended that you diversify your investment profile in the Indian stock market first before plunging to invest in US stocks from India.
Documents required to open a DEMAT and trading account
Any individual above 18 years of age who is a citizen of India can open a Demat account and trading account. However, you also need to provide some documents that substantiate your identity, bank account, and residential address. Some broking platforms may also ask you to provide a document validating your income.
Read also:- How Exactly Demat And Trading Account Work?