Investing in US stocks made simple via NSE IFSC
Published by Sharekhan Education | March 11, 2022
Investing in US stocks made simple via NSE IFSC
Ever considered taking your love for investing to a global level? Well, the US stock market is one of the top choices to invest overseas as it is home to the Big Tech and some of the biggest businesses in the world. One can now invest in the US stock market under the RBI’s Liberalized Remittance Scheme. This allows every Indian resident to remit up to $250,000 per year. Now, Indian investors will be able to trade in the stocks of 50 leading US companies like Amazon, Alphabet, Tesla, and Apple through the NSE IFSC platform in GIFT City, Ahmedabad.
How to start?
One will have to open trading and Demat accounts with NSE IFSC registered brokers. Presently, 36 brokers are registered with the exchange. Trading will begin at 8 PM IST and will close at 2:30 AM. The trading, clearing, settlement, and holding of US Stocks will be under the regulatory structure of IFSC authority. All investors would be eligible for corporate actions such as dividend and bonus issues. The settlement process will follow a T+3 cycle.
Purchase of fractional shares
Unlike in the Indian market, you can buy fractional shares in the US market. Investors will be provided with an option to trade in fractional quantities by NSE IFSC. For instance, the Amazon share price is $2750 per share, which translates to over Rs. 2 lakh in Indian currency. Since some of these US stocks are valued between hundreds to thousands of dollars per share, trading in fractions or owning shares of these companies in multiples of $10 to $20 will likely increase participation. The proposed trading framework will make US stocks affordable to Indian retail investors.
Benefits of the NSE IFSC platform
Indian investors will have a broader range of options in terms of tech-driven securities like Apple, Microsoft and Google. Also, by investing abroad, the portfolio is safeguarded from any domestic risks that might affect the domestic markets as a whole. Intra-day trading allows investors to benefit from market volatility during stocks trading hours, while also helping them reap the benefit of Rupee depreciation.
Risks of NSE IFSC platform
When investing in a foreign country, investors must be aware of the impact geopolitical or political events such as wars can have on their investment. Thus, investors must follow up on major political events such as wars, elections, trade agreements, tax changes, etc. Investors may also get hurt because of rupee appreciation. And lastly, the bid-ask spread might not be too attractive as a result of low participation, and that would drive up the cost of the transaction.
NSE IFSC platform will deepen the financial markets in International Financial Services Centres (IFSCs) and provide an opportunity for resident individuals to further diversify their portfolios.
In the meantime, If you would like to understand more about the art of investing, then go ahead and register for one of our free Power Money Workshops. And join our investing education program Stock Investor to polish your investing skills. Not only do we teach you the step-by-step process of identifying fundamentally sound stocks, but you also learn how to invest like a professional. So, come and experience it yourself!
By enrolling in this stock market course, a learner can learn the basics and the various aspects of trading.
