- Indians are eyeing greater returns from the US stock markets.
- New-age broking companies like INDmoney, Stockal, 5paisa, Vested Finance and more are making way for Indians to invest in companies like Tesla, Facebook, Apple, Amazon etc.
- One of India’s largest brokerage firms Zerodha is reportedly working with a US stock broking firm to bring the option to its users.
While most Indians are celebrating Sensex hitting the historic level of 50,000, there are many others going for bigger gains in markets abroad. Indians are now buying stocks like Apple, Facebook, Tesla, Netflix through stock broking companies — INDmoney, Groww and Stockal to name a few— which have partnered with US-based broking firms to enable investing.
For instance, Asian Paints was the best performer among all stocks in the last 10,000 points of the rally that took a little under eight months. The country’s largest paint maker gained nearly 98% in that time. Even compared to that, the rally in some technology stocks in the US has been spectacular.
Here’s a look at the returns offered by US stocks, according to wealth-tech platform Winvesta.
Top 5 US Stocks on Winvesta
|Stock||1 year return||3 year return||5 year return|
Source: Winvesta, Yahoo Finance. Returns are in USD.
While the decade-long bull run in the US has been a big pull for Indian investors, there are other factors, too, which make such investments attractive. “The declining value of the rupee and rising dollar value have also pushed more Indians to put their money into US markets,” Vinay Bharathwaj, Co-Founder & Co-CEO, Stockal Inc told Business Insider, adding that, “the US market gives stable and even generous returns at lower volatility over the long term.”
How to invest in US stocks
Indians can start investing in the US stock market by opening an overseas account with an Indian brokerage, open an account with foreign brokerage or invest through Mutual Funds with global equities.
Currently, the Reserve Bank of India allows an Indian to invest only up to $250,000 (₹2 crore) overseas per year without having to apply for special permissions.
But here’s what you need to remember while investing in an US stock, the profits will be subject to currency exchange rates and some brokerages may charge high commissions.
Startups that offer US stock investment to Indians
|INDmoney||Zero commission, transaction charges depending on banks|
|Groww (in beta phase)||NA|
|Stockal||Ranges from zero commission to subscription and volume based pricing.|
|5paisa||Zero commission (wire transfer and foreign exchange conversion fees applicable)|
|Winvesta||$0 per trade for 3 trades per month (10 free trades in the first month).$1 per trade after free trades|
|Vested Finance||Zero (Subscription charges are separate)|
*Zerodha reportedly has its US stock investment offering in the pipeline.
One of the popular platforms that was also one of the first to offer US stocks to Indian investors is the Ashish Kashyap-led INDmoney. The startup in May 2020 partnered with DriveWealth, LLC, a member of FINRA (Financial Industry Regulatory Authority) and SIPC (Securities Investor Protection Corporation) and a licensed carrying and self-clearing broker based out of the United States.
The startup also claims “zero account opening fee, zero brokerage i.e. no charges on buying and selling.”
Another awesome offering from @INDmoneyApp – bought my first ever US stock using indcoins https://t.co/GEC5yfIkOV
— Deepak Abbot (@deepakabbot) 1610376983000
Indians are eyeing greater returns from US stocks
Bharathwaj believes that in today’s world it seems rather restrictive that an Indian investor should not have access to own shares of companies like Netflix, Tesla and Amazon. He said that the problem with wealth management firms was they came with large minimum account requirements, rigid investing plans, extra costs for research, high commissions, and entry/exit loads.
“The availability of homegrown digital investment platforms that have made investing in the US market easy and accessible are also one of the major reasons why investors are considering expanding the scope of their investments. At Stockal, we have partly digitized the Liberalized Remittance Scheme (LRS) process, working with six banks in India, and are making it completely online, working along with a couple of our very large banking partners,” he said.
|Duration||Stockal Daily Transaction Volume||Top traded stocks by Indians on Stockal|
|April-June quarter||$1 mn/per day||Tesla (TSLA), Trivago (TRVG), Nio (NIO), Amazon (AMZN) and Palantir (PLTR)|
|Last six months||$2.5 mn/per day|