Due to globalisation, economies have become quite diverse as of late, and you can take advantage of this to extend your investment portfolio beyond your native country. While making investments in the local market can have its benefits, you can do more by entering the US stock market. Doing so will not only be an effective diversification strategy but you can potentially earn high returns on your investments.
In fact, outward remittances data from RBI in 2022 showed that Indians were active investors in US stocks, as investments under the Liberalised Remittance Scheme (LRS) shot up by nearly 73 %. These investments were predominantly in the equity and debt markets, indicating that the US stock shares market is a popular choice.
Read on for a deeper dive into the investment opportunities in the US stock market, the US stock market timings, and how to invest in US stocks from India.
The US stock market is one of the the largest ones in the world, with the New York Stock Exchange (NYSE) being the largest exchange globally, in terms of market capitalisation. This US stock exchange has around 2,400 listed companies for active trading, suggesting a big opportunity for investors.
For Indian investors looking to diversify funds into international markets space, it is important to keep track of the track the more prominent international stock indices. For instance, the Dow Jones Industrial Average US stock market index is one of the oldest ones and serves as a marker of the top-performing companies.
On a similar note, the Nasdaq Composite is considered to be another important market index for US stocks, along with S&P 500 and Russell 3000. If you are looking to enter these markers, it is ideal to be informed about these notable indices. Besides these, there are nearly 5,000 other indices that are dedicated to specific avenues of the US stock market.
Besides knowing the relevant US stock market index to track, it is also important to know about the US stock market timings.
Daylight saving time begins on the second Sunday of March and continues till the first Sunday of November. Trading on both the NYSE and NASDAQ US stock exchange begins at 7 a.m. IST and ends at 1:30 a.m. IST during the period. For the remainder of the year, the stock market opens at 8 p.m. IST and closes at 2.30 a.m. IST.
It is important to note that these are applicable only on weekdays, as markets are closed on weekends. Do note that the US stock market follows Eastern Standard Time and Eastern Daylight Time, based on the time of year. As such, the opening and closing times may vary by approximately 1 hour.
Nowadays, things like modernised financial solutions, along with useful policies issued by the RBI, have helped make overseas investing much easier than ever. While this may serve as a good avenue to get started already, find out more reasons why this can be an exciting opportunity:
When you choose to invest in US stocks, you park your assets in global entities. Here the market opportunity is high, as is the number of avenues across industries. Depending on your risk appetite, investing goals, and financial capabilities, you can choose freely and enjoy returns that aren’t typical of the local markets.
Moreover, you can enjoy the benefit of geographical diversification. This is a particularly notable benefit, as the US stock market allows you to invest in various companies across the globe. As such, you have the option to diversify into international markets through global companies based out of different corners of the world.
While investing in US stocks from India, you will be required to make investments in US Dollars, which means direct investments in the commodity itself. This can allow you to gain the benefits of appreciation within the US economy.
Since the Indian Rupee has been steadily declining in comparison to the US Dollar, this means that any profitable investments in US stocks will provide you even higher values, owing to Dollar appreciation.
Pooling all your funds in the domestic stock market does not shield you from market downturns efficiently. While you can opt for safer havens, investing in the US stock market can potentially offer you better protection.
This is because a US stock exchange will list companies from all over the world, and you can choose to park funds in regions that aren’t dealing with a troublesome exigency. Some investments may even help insulate your portfolio from market-diving instances occurring in some regions.
Another useful benefit of investing in US stocks is the option to purchase shares in fractions, otherwise known as stock tokens. These can let you make investments in your preferred multinational firms without needing to pay the high-entry cost of buying a whole stock piece.
This is especially ideal if you are a new investor with limited capital, as fractioning can let you purchase stocks easily. You can add stock tokens from companies like Google at an affordable pace.
Just as there are a few ways to invest in the local stock market, there are also limited ways to invest in the US stock market. The two common routes include feeder funds and RBI’s Liberalised Remittance Scheme (LRS). While both routes have their own advantages, you can choose one according to your financial goals and widen your options.
By opting for feeder funds, you will be able to invest via mutual funds. These are then further broken down into a fund that invests in international mutual funds and those that invest in international stocks. The former is commonly called a fund of funds investment.
Regardless, feeder funds are one option and provide ample opportunity for exposure to overseas markets. Do note that with this route you may not have full flexibility as you are restricted to the feeder fund options available.
The Association of Mutual Funds in India (AMFI) and the Securities and Exchange Board of India (SEBI) have restricted new investments by Indian Mutual Funds in international securities. While existing SIPs may continue, new investments via the mutual fund route will not be possible.
Alternatively, the LRS route is still a viable option, enabling you to control your investments . Here, you are allowed to remit, or transfer, up to US$ 250,000 in a given year, and this money can be used for investing purposes.
As such, this route allows you to invest in global markets, like the NYSE or NASDAQ US stock exchange. To make this process a lot more seamless, Indian financial institutions are now partnering with US-based financial entities to offer these services .
One example is the Bajaj Financial Securities Limited partnership with US-based Vested Finance. This partnership can allows you to avail investing services offered in India, and these grant access to both US ETFs and the US stock market.
Services like these have provisions to guide you on the best US stocks to buy now or the best companies’ stocks to invest in based on your goals. Best of all, the entire process is digital, and you can get started as soon as you complete the KYC approval procedure
When the goal is to diversify your portfolio and venture into global markets, one of the simplest routes is via Bajaj Markets. Here, you can take advantage of the Bajaj Financial Securities Limited partnership with Vested Limited and invest overseas with ease.
You can move one step closer to your financial goals by learning how to trade within the US stock market from India. The opportunities to diversify your portfolio can only widen through both local and overseas markets. You can visit Bajaj Markets for all your investment requirements, and get started!
International investment is not supervised by any regulatory body in India. Thus, any claim or dispute relating to such investment or enforcement of any agreement/contract /claim will not be under laws and regulations of the recognised stock exchanges and investor protection under Indian Securities Law.
The account opening process will be carried out on Vested platform and Bajaj Financial Securities Limited will not have any role in it.”
Bajaj Finserv Direct Limited is only acting as lead referral of Bajaj Financial Securities Limited for US investments. Bajaj Financial Securities Limited has tied up with Vested Inc for US investment.”
As an Indian, you can invest via feeder funds offered by asset management companies (AMCs) or via RBI’s Liberalised Remittance Scheme (LRS). You can also invest by visiting Bajaj Markets and choosing the appropriate service.
The US stock market time for pre-market trading, normal trading and after-hours trading is standard, regardless of the US stock exchange. For both NYSE and NASDAQ, the pre-market trading hours are between 1:30 p.m. IST and 7 p.m. IST. The investor should be aware that there may be risks associated with trading in the pre-market and after-hours time as it is associated with low liquidity, low volume of participants and volatility.
When you invest in US stocks from India, you pay tax on investment gains and on dividends. On investment gains, you are taxed in India based on whether they are short-term or long-term capital gains. On dividends, you are taxed 25% in the US and one can claim benefit from the Double Taxation Avoidance Agreement (DTAA) in India.