How to Invest from India in US Stocks | Motilal Oswal

US Stocks

Without a shred of doubt, America is the homeland of some of the most major companies in the world today. The best stocks you can find on the planet exist within the US, namely, those of Apple, Facebook, Google, Microsoft, General Motors and the like. If you decide to buy such stocks, you not only become a significant part of their story of growth and development, but your decision to invest in US stock could well see some great returns. Diversifying your portfolio beyond the Indian stock market is a good idea as you get the benefit of investing in companies with a substantial progress story. 

US Markets Gain Traction With Indians

As Indians are getting savvy at entering the markets within India to wisely invest in some of the best Indian companies, several investors show the inclination to diversify their portfolios across geographies. Automatically, they think of a way to invest in US stock. As this is one of the largest economies in the world, the connection to US investment is something of a wish fulfilment for many investors. A number of opportunities exist to invest in the US markets from an Indian point of view. Investors may choose mutual funds, ETFs, index funds, or they can even use the route of the Liberalised Remittance Scheme (LRS) permitted by the Reserve Bank of India, to invest. If you wish to invest, you need to open a demat account and can use the LRS to purchase direct equity. 

Starting to Invest

Today, everything from buying groceries to stock investing is done online. Opening an online demat account is as easy as you can imagine, and this can spur you to invest in a wide variety of US stocks. In the current economic scenario of the US, you may find that US markets are at a significant low (from the high levels of November 2021), and this should tell you that it's the right time to invest. This is especially so if you are a long-term investor and want to have a part of one of the world’s richest economies in your portfolio. Right now, the US economy may be in the throes of low liquidity and growing inflation, but for the long run, investors can benefit from investing in the US markets. You may have already invested in Indian stock markets via a number of avenues like SIPs, mutual funds and any upcoming IPO. However, it's a good idea to shift your view to the US markets and invest in US stock, through the channels of index funds and ETFs with expense ratios that are low. 

Investing from India

Before you turn your attention away from the US markets in case you think they are  a challenge to invest in, you should be aware that there are very easy ways to invest from India, in fact from the comfort of your residence. In the first two options that are mentioned below, you will have to place funds in a trading account (linked to a demat account) after you convert the rupee to the US dollar. Furthermore, you have to use a good brokerage that handles international transactions and you must check the brokerage fees, conversion rates, any commissions charged, etc. if they are applicable. You can also check apps of good brokerage houses, like Motilal Oswal, and get some background information. The MO Investor is one such app that gives you some knowledge about investing in the US markets. Ways to invest are highlighted below: 

  • Start a Domestic Trading Account - You can open a domestic demat account which is linked to a trading account in India. Reputed Indian brokerages like Motilal Oswal have connections with US broking firms and you can invest in the US markets directly. 
  • Start a Trading Account Abroad - You can also check if you can open a US-based trading account like that of Ameritrade, Webull, etc. 
  • Invest in US Stock through NSE IFSC - The third option available to you for investment in US stocks is restricted as of now. The NSE IFSC (a subsidiary exchange of the National Stock Exchange) presently supports just eight stocks of the US. These are Apple, Amazon, Alphabet, Tesla, Netflix, Meta, Walmart and Microsoft. The number of stocks will gradually increase to 50 company stocks, but the exact time when this will occur is yet unknown. 

How Much to Invest 

Besides directly investing in equity, you may consider mutual funds and exchange traded funds or ETFs. However, for the present moment, the mutual fund vehicle is out of the question as mutual funds have surpassed the maximal limit permitted by the Reserve Bank of India. The RBI, or Reserve Bank of India, allows Indians to invest a maximum of $2,50,000 (approximately Rs. 1.9 crore), under a scheme known as LRS or the Liberalised Remittance Scheme. 

Open a Demat Account and Start Investing

If you wish to trade and invest in stocks in the US through the NSE IFSC, you must have an online demat account. You must also open a linked trading account so you can buy and sell any of the stock listed on the exchange. There are certain brokers in India that are registered with this exchange and you must open accounts with these authorised brokers only. You can open a demat account very easily through a few steps online, and submit certain eligibility documents like your PAN and Aadhaar cards for the same. Once your demat account is up and running, your trading account can be started. Your trading account needs to be funded by you for stocks to be bought. Both accounts will be tied to your bank account should you sell your stocks and the profits have to be credited. 

Through the MO Investor, you can invest in multiple investment vehicles with a simple demat account and a trading account. In the Indian context, you can invest in a multitude of channels from an upcoming IPO to mutual funds and commodity futures. With a US investment in mind, you can easily invest through an Indian broker who is registered to trade in the US markets.

 

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account

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