If you want to trade in the US market from India, you must first understand and consider certain factors. First, at this point in time, wage pressures need to subside to be certain that the threat of inflation has passed. Here’s where the US central banks erred in expecting inflation to prove “transitory” since they misjudged the degree to which a tight labor market would cause employees to demand higher pay. 

The US interest rates will increase to between 4.5% and 5.0% during the 2023 first quarter and then stop there, assuming that both headline and pay inflation are slowing. Like the Fed, the ECB is anticipated to halt at 2.5% to 3.0% during the first quarter. Given that UK inflation is expected to be more persistent, the Bank of England might take a little longer to reach a peak.

Although it is believed that the US central banks would be content to stop as long as inflation is moving in the correct direction, inflation may not be returning to 2% any time soon. It has frequently taken a long period for the economy to shift and find new sources of growth after an excessive expansion in one sector, most frequently business investment or housing. This time, the rise of investments and houses has been more restrained. If you are interested in how to trade in the US market from India, it would be a good idea to start reading up about the current market scenario to make informed decisions. 

The Bullish Scenario for Equities 

The fundamental assumption behind JP Morgan’s base case for developed market equities in 2023 is that a modest recession has already been largely factored into many stocks. The S&P 500 has dropped 25% from its high by September 2022. The stock market often recovers after a fall of this magnitude by being higher a year after. Since 1950, there have only been two exceptions: the 2000 dot-com bubble crash and the 2008 economic crisis. No macroeconomic analogies can be seen to 2008, but how about valuation comparisons to 2000? If values need to fall much lower from here, it might jeopardize the optimistic base-case scenario for equities. The S&P 500’s starting 2022 valuations are not too far from those observed during the dot-com bubble. But growth stocks could be mostly to blame for high prices. Even when these equities do poorly in 2022, they are still not very inexpensive by historical standards.

However, value equities are relatively inexpensively priced compared to the past. Therefore, value equities are more likely to increase by the end of 2023 than growth stocks, which still appear costly. However, a spike in government bond yields in 2023 would support the valuations of growth stocks. So, do you want to read further on how to trade in the US market from India? Here are some suggestions for choosing the finest stocks to profit from the recent decline in many equities and the potential for future favorable conditions:

• Keep in Mind That You Are Taking the Risk of Betting on Yourself

You must comprehend the rules of the game and the probabilities before you start formulating your plan to succeed Warren Buffett. By selecting particular stocks, you are placing a wager on your potential to outperform the market and increase your return above the overall stock market. Unfortunately, it is quite challenging to accomplish this: After five years, 84% of professional fund managers—whose sole responsibility is to beat the index—fail to surpass their benchmarks. Moreover, 95% of managers flunk at that task after 20 years, according to S&P Global’s SPIVA U.S. Scorecard research.

Maybe there’s a better chance for retail investors? It turns out they might not have. The S&P 500 increased by 9.5% annually between 2002 and 2021, 20 complete years. But, as per J.P. Morgan Asset Management, the average investor only made 3.6% yearly, just beating the 2.2% tax imposed by inflation. The poor actualized returns of average investors are primarily the result of psychological errors like overtrading, purchasing when equities are up, and selling when they are down.

• Set Your Risk and Return Goals

Have you wondered, “can Indians trade in the US market”? Absolutely, yes! To begin with, defining your goals is the next stage if, despite the odds, you still want to choose your own stocks. Do you want to build a multimillion-dollar stock portfolio by the time you are 40? Are you a youthful, high-risk investor? Congratulations! You’ve successfully reduced your search to high-risk, high-reward choices, most likely growth companies or undervalued contrarian picks.

Do you simply want to keep it safe and possibly make some money while doing it due to a shorter runway? Only blue-chip corporations and dividend stocks may be ideal for this scenario; real estate investment trusts and dividend aristocrats may contain some excellent portfolio components.

• Do Research to Zero Down the Names and Conduct Analysis Around Them

Study the industry and have an understanding of it. This includes using fundamental and technical analysis to estimate a stock’s fair value and evaluating a company’s prospects to ensure they are consistent with your strategy and objectives. Build your portfolio using a combination of qualitative and quantitative stock analysis. You can design a method that works for you by doing this. When making investment decisions, keep emotion at bay. Don’t just buy stocks because they are popular; think things through before making a purchase or sale. Make careful decisions to diversify your investments to spread out your risk.

• Manage Your Risk and Diversify 

It’s crucial to choose equities that complement your risk-management plan. All markets have some level of risk since trades could not always perform as expected because external variables constantly influence equities. As a result, you could encounter risks, including out-of-date business models, poor management decisions, and new competitors while choosing stocks.

Additionally, if you intend to purchase securities from foreign nations, you must consider exchange rate risk and general market risk, which must be considered. The approach you use, your exposures relative to your wider portfolio, and the risk-reward ratio you have established for yourself will all impact how much trading risk you take on. Consequently, it’s crucial to consider how much money you’re ready to put in danger.

• Stay Away From Volatile Stocks and Follow the Trend

Due to its unpredictable nature, high volatility could be terrible news for you. If these stocks go in the wrong direction, you might lose a lot of money. These stocks are typically illiquid due to their low daily trading volumes. Most of these stocks fall into the low-cap category; however, some also fall into the mid-cap group. In terms of trading, following the trend could be a good idea. You should keep an eye out for stocks that could increase in value during a bull market.

• Be Aware of the Liquidity

The most crucial trading advice when picking the best stocks for trading is to consider liquidity. Less liquid stocks don’t allow you to purchase and sell larger volumes since there aren’t enough buyers and sellers, but more liquid stocks do. Illiquid stock increases the risk that you won’t find buyers when it comes time to take profits or may not be able to get the prices you want because of the higher bid-ask spread.

• Stay Away From Businesses You Don’t Seem to Get

A stock is nothing but a portion of a company’s ownership. Would you choose to invest in a small local firm without first reviewing its financial records and learning about its income, expenses, seasonality, possibilities, dangers, and competitive advantages? Good stock selection necessitates the same attentiveness and comprehension, a notion frequently emphasized by legendary investors. For years, Warren Buffett has proclaimed this from the rooftops, and Peter Lynch, the illustrious former manager of the Fidelity Magellan Fund, has urged investors not to ever invest in concepts they can’t draw with a crayon.

Wrapping It Up

Now that you understand how to trade in the US market from India better, remember that technical or fundamental analysis and research into the stock market are vital. You will always benefit from conducting high-quality research when you are trading. For example, you might focus on the sectors that are important to you and your financial objectives by first picking the index that is likely to rise. Then, you can compile a list of numerous stocks connected to these industries. Through its wide range of instruments and user-friendly interface, Stockal allows you to test your trading and investment ideas. Find more in detail on how Indians can trade in the US market before you proceed to buy the best US stocks to trade in!