There are several ways for Indian investors to purchase international stocks and hold them in their portfolios for the sake of geographical diversification. Direct equities, mutual funds, and exchange-traded funds are just a few of the ways you can diversify your portfolio by making international investments. Geographical diversification contributes to managing the risk-adjusted return of your portfolio in addition to diversifying across asset classes, market capitalization, industries, etc. Buying foreign stocks is legal in India and one can own US stocks from India.
Here are 5 ways to invest in the US stock market.
On NSE International Exchange (NSE IFSC), a fully-owned subsidiary of the National Stock Exchange of India, you can easily purchase US stocks directly. You can transfer money from your local bank account to the bank account of NSE IFSC registered brokers after opening your trading and Demat account with them. You are now prepared to trade on the NSE IFSC US Stock platform once the funds appear in your broker’s account.
India INX Global Access
Access to foreign stock is also made possible by the India International Exchange (IFSC) Limited (India INX), the BSE’s international division. Through its wholly-owned subsidiary India INX Global Access, you can trade in international stocks, including shares of significant US-listed firms. The US, Canada, UK, Europe, Australia, and Japan will make up around 80% of the equities that India INX plans to offer.
International mutual fund schemes
There are global investment opportunities through international mutual fund schemes. Although some of these mutual fund schemes follow indexes for Latin American or Asia-Pacific nations, the majority of the schemes follow the US market. Presently, the Indian mutual fund houses have been asked by the Sebi to go slow on collecting deposits for foreign funds as the upper limit has been breached. One may consider investing through ETF or Fund of Funds to invest abroad.
The Exchange-traded funds (ETF) units are traded on the stock exchange during trading hours, in contrast to mutual funds. Therefore, while the exchanges are open, one can purchase and sell ETF units just like one would buy equities. ETF trading is open to anyone having a Demat account at any brokerage house. Access to Nasdaq and other top global indices is available through a number of ETFs.
You can purchase US equities from India in a similar way as purchasing stocks included in the Nifty 50 or Sensex. However, you must first go through the necessary procedures to open an international brokerage account and meet the LRS requirements set forth by the RBI. For all of this, you can contact any international brokers in India, including Stockal, Vested Finance, IndMoney and Winvesta. You can diversify your domestic portfolio by purchasing US equities or ETFs across sectors and themes once the accounts are set up.