By Sachin Samant
The Covid-19 pandemic unexpectedly became an inflection point in the brief but rather eventful history of the Indian capital markets. Scores of new, young and most importantly retail investors flocked to the Indian equity markets drawn by its promise of stellar returns and wealth creation opportunities. This spontaneous outpouring of enthusiasm from the retail investors is powered by digital undercurrents transforming the Indian business landscape. It is evident from the number of demat accounts opened in the past two years. From an average of 4 lakh new Demat accounts opened every month in FY20, it soared to 29 lakh per month until November 2021. The proof, as they say, is in the pudding and going by the excitement for wealth building emerging from ground zero, India’s tryst with the bourses is only beginning.
In this scenario, it is most welcome that a wholly-owned subsidiary of the National Stock Exchange called NSE IFSC is rolling out the red carpet for Indian retail investors who wish to own shares in reputed American companies. By leveraging the NSE IFSC route, the retail investor will be able to participate in the dynamic action of international markets in a simplified and convenient manner at the most economical costs. Retail investors will also revel that they would invest in companies whose products they use daily. It’s a great avenue of diversifying one’s investments. It will also permit the investors to own depository receipts in their accounts and will be eligible to receive the corporate benefits arising from those stocks. As of now, Indian investors will be able to buy or sell shares in the top 50 American companies, including Alphabet, Apple, Microsoft, Amazon, Coca-Cola, and many more.
GIFT IFSC remains the only business hub in India that permits offshore transactions. Adding to the appeal of the city are statutory exemptions and concessions coupled with a robust ecosystem of banks, insurance, capital market and law firms that operate in compliance with the regulatory and legal superstructure. And, in this endeavour geared at steering global capital into the Indian playing field, Kotak Mahindra Bank has had a pivotal role to play. The bank remains at the forefront of onboarding new investors and easing new FPIs into the market, helping them become stakeholders in the Indian growth narrative.
The GIFT IFSC financial centre has been making great strides in expanding the investment landscape for Indian retail investors. Simultaneously, the exchange has also accelerated the entry of foreign funds in India. In this beneficial dynamic, all the stakeholders, including domestic and foreign investors, the exchange or the larger investment landscape in India, emerge as winners. Opening the doors for retail investors is only a small thread in the larger tapestry of the global flow of capital. If India’s rich and boisterous economic history is anything to go by, I am sure, in a span of a decade or two, Indian investors will be blazing new trails in foreign markets as well. The ascent to that distant goal begins with NSE IFSC.
The NSE IFSC Exchange has the potential to be a game-changer, one that will upend extant investing models and leave an imprint of the strength, vitality, depth and risk appetite of the domestic retail investor on American markets. Indeed, there are nay-sayers but do recall there were many who forecasted that Indian retail participation will be limited only to those at the very top and will never towards higher grounds; their surge animated by millions of steadfast investors who pool in their hard-earned savings into the markets and trust them with their futures.
As of now, investing in US stocks is inconvenient and relatively expensive. But all that is bound to change now. Investors can start investing by opening trading and Demat accounts with NSE IFSC registered brokers. Currently, 36 brokers are registered with the exchange. Investors will then transfer funds from their bank account to the broker’s bank account. Once that amount is reflected, they’ll be ready to trade in NSE IFSC US stocks. The trading sessions will begin at 8 pm and continue till 2.30 am of the next day.
(The author is president and business head, banking & financial institutions group, Kotak Mahindra Bank. The views and opinion expressed in the column are personal and do not necessarily reflect the opinion of the organisation or the Kotak group)