When it comes to exploring global stock markets, the United States of America has become an obvious choice. The United States has the most established, liquid, adaptable, and effective financial markets worldwide, and investors would like to diversify into global markets. But can Indians trade in the US market?
Earlier, the process of trading US stocks from India was a remarkably tedious one. An investor had to go through the arduous task of funding their global accounts. Indians would have to submit necessary statutory forms, pay exorbitant fees, and often have to visit banks physically.
However, investing abroad or in US stocks from India had traditionally been difficult for Indian investors, but this has changed in recent years. Continuous technological innovation has made investing in foreign markets much easier for Indian investors. Thanks to several investment platforms, such as Stockal, Investors can enjoy trading in US stocks from India, and participating in an activity on US stock exchanges has become immensely simpler.
The cherry on the cake is that trading in US stocks from India also fetches several advantages over trading in Indian stocks. The US markets have historically been less volatile than Indian markets. The volatility of the Indian market has increased.
Over the last 15 years, the Dow Jones standard deviation has been around 18%, and the S&P standard deviation has also been around 18%. In comparison, the Nifty standard deviation has been around 22% over the last 15 years. Simply put, market volatility occurs more frequently in India than in the United States. As a result, investing in the United States stock market may be considered a safer bet than investing in Indian markets.
Moreover, in the past 10 months, the Rupee has depreciated by about 9% to the Dollar. One of the primary advantages of investing in US markets is the American Dollar. Even if the value of your overall investment does not rise, the value of your resources will.
In India, all investments are made in INR. USD is the currency used for investments in the United States. Given the rupee’s steadily declining value to the US dollar over time, investing in US dollars will yield higher returns. Even though the portfolio has not changed, the investments have grown in value as the US dollar has strengthened. As a result, investing in dollars outperforms investing in rupees.
The advantages and the simplicity of Indians’ trade in US stocks from India have not gone unnoticed by investors. According to Winvesta’s Quarterly Pulse Report for the April-June quarter 0f 2021, Indian investor preferences for US stocks and ETFs have increased.
Moreover, according to data, Indian investment in the United States increased by more than 200% between 2020 and 2021. While the number of investors transacting on Stockal increased by nearly 250%, volumes more than doubled, rising from $250 million in 2020 to close to $500 million in 2021.
Outflows for international stocks and bonds under LRS increased by 58% to an all-time high of $747 million in fiscal 2022, up from $472 million in the fiscal year 2021.
Trading in US stocks from India is now easier and more lucrative than ever, so how do we get onto the bandwagon and get in on the action? Let’s explore how to trade in the US market from India.
How to trade in US market from India?
Trading in US stocks from India has become hassle-free, owing to platforms like Stockal handling the majority of your due diligence and paperwork. However, to break it down there are three general approaches to investing in the stock market in the United States.
- With apps like Stockal:
Stockal is the answer to the question whether can Indians trade in US markets. It is a neo-brokerage platform that gives you access to global markets and allows you to diversify your portfolio. Over 5,500 stocks and ETFs are available to Indian investors on US exchanges.
Investors can choose from stocks, exchange-traded funds (ETFs), and custom international portfolios created by financial experts. When you open an account with Stockal, they automatically open a brokerage account with their US clearing and brokerage partner. Within 15-20 minutes, your account will be approved. You must fund the account once approved by transferring funds from your bank account to the brokerage account.
Unlike most traditional investing platforms, Stockal does not limit user accounts. Stockal has no account minimum. KYC documents, such as a picture ID and proof of address, are required to establish the user’s identity. You have the option of uploading your documents using your laptop or your smartphone.
If you are new to investing or are just in general caught in the quandary of how to trade in US market from India or how much to invest. A platform like Stockal is the answer, It has simplified the process for first-time investors looking to diversify. One of the key features of Stockal especially for a new investor, are its stacks, curated ready made portfolios.
Stacks are pre-assembled baskets of stocks and ETFs that can be purchased with a single click. Leading financial experts curate stacks around a particular theme or idea. These stacks correspond to different investment strategies, risk tolerance levels, and investment objectives. As part of a rigorous research process that ensures investment ideas are accurately matched to opportunities, multiple forward-looking macro and micro uptrends are analyzed to identify value-creation drivers in the ecosystem.
All investors need to do is furnish their details, fund their accounts, and get investing – as simple as that.
- Opening an overseas trading account with a Domestic Broker
Many domestic brokers collaborate with US stockbrokers. They act as middlemen, wrapping up your transactions. Domestic brokers have agreements with US brokers that enable you to invest in US stocks directly. You can open a foreign trading account with any of these brokers. To open this account, you may be required to submit a set of documents.
However, it is important to note that this facility has some limitations. Depending on the brokerage, you may be limited to certain investment vehicles or the number of trades you can make.
- Opening an overseas trading account with a foreign broker
You can also open an offshore trading account with a broker in India. Make sure you understand the charges before opening an account. Before deciding on the best broker to invest in US stocks from India, do your research.
An important point to remember while choosing a medium to invest in US stocks is the charges, bank charges, exchange conversion charges, and remittances. For instance, when you add money to your Stockal account, there are no fees or charges. On the other hand, your bank may charge fees for international external remittances. You should contact your bank or log into your NetBanking account to check the bank fees.
In Conclusion: Can Indians trade in the US stock market from India?
With liberal investment regulations governing the Indian economy, there is a good opportunity to invest in foreign markets. While investing in US stocks would seem simple now, the key to prudent investment is selecting the right stock or ETF with a proper strategy for holding them for the long or short term and selecting the right investment medium. Even though the process has become simpler, investing in US markets can be intimidating owing to new terminologies, technologies, and options.
However, with practice and the help of reputable platforms, you can easily master the art of investing in the US from anywhere in India. Upcoming applications such as Stockal have made investing much easier in the United States.
The expensive bank transfer, which incurred costs such as exchange and transfer charges, has been replaced by much lower-priced internal payments made through banks. Stockal will aid you without any hassle, probably at lower transfer and forex fees as well.
A new-age app such as Stockal aims to provide a simple and hassle-free process. Along with providing a seamless process, it takes away, It also alleviates the stress of selecting the best investment security. It also provides its users with Stacks curated to the user’s investment profiles: all a user has to do is click and start investing.
