With globalisation, economies are inherently diverse, and there’s no reason that your investment portfolio shouldn’t enjoy the same benefit. While investing in the local market is beneficial, tapping into the global market, such as the US stock market, has proven to be a viable strategy in the past.
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 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 the largest 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 track the more prominent international stock indices. For instance, the Dow Jones Industrial Average US stock market index is one of the oldest and serves as a marker of the top-performing companies.
Similarly, the Nasdaq Composite is another major US stock market index, along with the S&P 500 and the Russell 3000. Investors looking to venture into these markets must be aware of these major indices. Aside from these, around 5,000 other indices are devoted to specific areas of the US shares market.
Aside from knowing the relevant US stock market index to track, it is also important to note 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.
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 1 hour.
Modern financial solutions, complemented by supportive policies from the RBI, have made investing in overseas markets a lot easier. While this is one of the reasons to invest in US stocks from India, there are others as well. Here’s an overview.
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 enjoy the benefit of geographical diversification. This is a particularly notable benefit, as the US stock market allows you to invest in 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.
When you invest in US stocks from India, you are required to invest in US dollars. As such, you are also indirectly investing in the US Dollar itself, and you enjoy the benefits of any appreciation it witnesses.
As per the current economic trends, the Indian Rupee has witnessed a steady decline against the US dollar, and so any profitable investments in the US stock market generate even greater value due 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 offers 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.
When investing in the US stock market, you have the option to buy stock as a fraction of a whole, and these are known as stock tokens. Fractional shares allow you to invest in your favourite multinationals without the high entry cost of buying an entire stock unit.
For newer investors with limited capital, fractional investing allows the easy purchase of stocks. It will enable you to add stock tokens from leading companies like Google at a pace you can afford.
Just as there are a few ways to invest in the local stock market, there are also a few ways to invest in the US stock market. The two common routes include feeder funds and RBI’s Liberalised Remittance Scheme (LRS). Both routes have their merits, and your options widen based on your goals.
With feeder funds, the route is to invest via mutual funds. Here, it is further broken down into a fund that invests in international mutual funds and funds 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 option, 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 fresh investments by Indian Mutual Funds in international securities. While existing SIPs may continue, new investments via the mutual fund route aren’t possible.
Alternatively, the LRS route is still a viable option and is one that puts you in the driver’s seat. 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 such a service.
One example is the Bajaj Financial Securities Limited partnership with US-based Vested Finance. This partnership 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 KYC approval.
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.
Learning how to trade in the US stock market from India can help you get closer to your financial goals. Both local and overseas markets have opportunities, and diversifying can only work in your favour. For all your investing needs, visit Bajaj Markets to get started.
Disclaimer: “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.