The Market is Being Ruled By Retailers
The number of Demat accounts has multiplied over the last two years, demonstrating how individual investors are renewing their confidence in the expansion of the Indian economy. As of April 30, 2022, there were 9.28 crore total Demat accounts, according to two depositories, NSDL and CDSL. This amount is over three times what was noted as of March 2020. The overall number of Demat accounts was 2.12 crore, according to CDSL, in March 2020, and it increased to 6.50 crore by April 30, 2022.
There is more money from individual investors in the stock market if there are more Demat accounts. The percentage of retail investors in firms listed on the NSE achieved an all-time high of 7.42 percent as of March 31, 2022, up from 7.33 percent as of December 31, 2021. Retail holdings in firms listed on the NSE also achieved an all-time high in Indian rupee value on December 31, 2021, rising from Rs 19.05 lakh crore to Rs 19.16 lakh crore, or 0.56 percent. This growth has also contributed to an increase in Indian investment abroad.
Mutual Funds Want To Expand The Investment Cap
The rupee is already at record lows, therefore, Indian authorities are unlikely to approve an increase in the cap on mutual fund investments in foreign assets, among other reasons. The total amount that Indian mutual fund schemes may invest in foreign funds that hold the assets is capped at $7 billion. A distinct cap of $1 billion applies to local funds investing in ETFs. A need for larger restrictions has arisen due to the value collapse of some of those schemes, which will assist investors in lowering their average investment cost.
The authorities could possibly believe that there is no need to increase the cap since Indians can invest abroad via other channels, such as the Liberalised Remittance Scheme (LRS), which permits resident Indians to transfer up to $250,000 every fiscal year freely. On September 28, the rupee fell to a new low against the dollar at 81.93, caused by significant capital outflows from foreign portfolio investors and a sharp change in the state of the world’s financial markets as a result of the withdrawal of very accommodative monetary policies to combat inflation.
A record $27.3 billion worth of Indian equities has already been sold by foreign investors this year. If domestic investors suddenly start to invest more money in foreign companies, the local currency may suffer even more, and the RBI, in particular, is unlikely to support that.
Mutual fund overseas schemes late in the previous fiscal year exceeded the permitted ceiling of $7 billion as investors flocked to take advantage of a bull market in the US. As the RBI did not raise the ceiling, mutual funds have now ceased taking new investments into such schemes. The sector has pushed for a greater cap. At least 65 foreign funds are marketed to domestic investors by Indian mutual funds.
Investing in US Stocks From India
Yes, investing in US stocks from India is possible. Indian investors may begin investing in US stocks, the S&P 500, Dow Jones, NASDAQ, or other US-listed firms if they are interested in diversifying outside Indian equities and financial instruments beyond the Sensex or the Nifty 50. Under the RBI’s Liberalised Remittance Scheme, Indian investors can invest in US equities or ETFs.
- Opportunity to invest in innovation-driven countries: A rebalanced, diversified portfolio’s long-term returns are more than just the weighted sum of its components, which makes it conceivable for the combined portfolio to exceed indices.
- Changing market leadership: The justification for diversity is apparent: U.S. and foreign equities frequently switch roles as performance leaders. What would the future bring if leaders ended up becoming laggards? Your ability to engage in whatever location is performing better at any given time is made possible by global diversity.
- Diversifies currency exposure: In the past, the rupee has lost 2–3% of its value against the dollar annually. Therefore, investing dollars could suggest a return increase of 2% to 3%.
- May reduce risk: An international portfolio can decrease risk in investments. Gains in the investor’s international assets help smooth returns if U.S. stocks underperform. Holding a mix of stocks from established and developing markets in the global portfolio can further decrease risk.
What are The Best Brokers To Invest in US Stocks From India?
- Stockal: It is a neo-brokerage platform that enables you to diversify your portfolio and gain access to international markets. Indian investors can access more than 5,500 stocks and ETFs on US exchanges. Stocks, exchange-traded funds (ETFs), and specially crafted global portfolios compiled by financial professionals are among the options available to investors.
Stockal automatically opens a brokerage account with their US clearing and brokerage partner when you open an account with them. You can expect your account to be approved in 15 to 20 minutes. Once approved, you must fund the account by wiring money from your bank account to the brokerage account.
| Pros |
| An extensive selection of financial instruments including stocks, EFTs, and stacks |
| Telephone, email, and live chat customer support |
| Extensive tools and research options. Tipranks features offered by Stockal. |
- Saxo Bank: It is a Danish investment bank. Globally, it is governed by a number of financial regulators, including the renowned UK FCA. The Saxo Markets platforms are very user-friendly and excellent for novice investors. Users will have access to interactive tools via their SaxoTraderGo platform and Saxo Academy to learn as they invest. This comprises—but is not limited to—annotation tools, pattern trackers, comparison tools, and current third-party market information. The Saxo Bank website also has a number of educational videos that may supplement your research, and their 20-day trial period will help you understand what you’ve learned.
| Pros | Cons |
| Vast product portfolio | High options, bond, and futures fees |
| Excellent trading platform | High account minimum deposit |
| Excellent research | Lacks 24×7 availability and live-chat |
- Interactive Brokers: It is a US discount broker. It is supervised by several bodies, including renowned ones like the FCA and the SEC, and is listed on stock exchanges. A platform for seasoned traders is available from Interactive Brokers. Their all-inclusive web application, TraderWorkstation, provides features like SmartRouting, which aids in locating the best markets to invest in at the lowest cost, and Option Labs, which helps you forecast outcomes while trading options. The ideal strategy to choose which service to purchase may be to familiarise yourself with each program because each provides a trial time.
| Pros | Cons |
| A varied range of excellent research tools | Complicated procedure for opening an account |
| Low trading fee | Complex trading platform |
| A wide variety of products | Higher customer complaints |
Wrapping Up
The value of stock investment has been recognized by Indian retail investors. Although equity has the potential to provide superior returns over the long run, it may be volatile in the short term. There is a fair probability of achieving higher long-term profits the earlier you start.
Wondering how to begin investing in US stocks from India? The easy-to-use Stockal App allows investors from India to make investments in US equities. The user of Stockal may invest directly in US equities, funds, and ETFs that hold US stocks. From the comfort of their own home, an investor may hold US shares in India.
