India

Introduction

India is a massive economy, and comes with a host of investing opportunities as a consequence of its size, diversity, and growth. India's economy is expected to reach $4.6T by 2024. While India began as an agrarian country post-independence, manufacturing & services now account for its fastest growing sectors. Indeed, a key reason behind India’s rapid growth trajectory is its rising middle class, limited dependence on exported goods, a booming tech sector, and a high population of youth. 


Indian Stock Exchange

The two main stock exchanges in India are the Bombay Stock Exchange (BSE) & the National Stock Exchange (NSE). Both exchanges list the same securities. 


Market Indices

The two most significant market indices in India are the Sensex & Nifty.

The BSE Sensex is a market-weighted stock market index of 30 companies listed on the Bombay Stock Exchange. These 30 companies are representative of the many industrial sectors that contribute to the Indian economy 

Fun fact! The word ‘Sensex’ is a portmanteau of the words Sensitive and Index

The Nifty 50 is a stock market index that takes the weighted average of the 50 largest companies listed on the NSE. It is the largest, single financial product in India - and the world’s most actively traded contract 


Trading Hours

The NSE & BSE are open from 9:15 to 15:30 IST, and don’t include breaks for lunch. They are not open for trading on the weekend. As such, if you’re trading from abroad, it is important to be mindful of the timezone

If I live in India, how can I invest in the U.S.?

Anyone in India with proof of identity, such as a passport or Aadhar card, a PAN card, and proof of residence, is eligible to invest in the U.S. stock market. Under the Liberalized Remittance Scheme (LBS) under the Reserve Bank of India, Indian residents can invest up to $250,000 per year in overseas stock markets. 


Avenue 1: Open an account with an Indian-based broker with access to the U.S. stock markets

ICICI Direct, HDFC Securities, Axis Securities, and Kotak Securities are Indian brokers with access to the U.S. markets.

Avenue 2: Open a trading account with a U.S.-based broker

Interactive Brokers, TD Ameritrade, Charles Schwab, and TradeStation permit Indian citizens to set up an account and trade U.S. securities 

Avenue 3: Invest through a third-party app

An example is Vested which is a SEC-registered advisor that offers zero commission trading in U.S. stocks for individuals residing in India; they have a mobile app to execute transactions, and there is no minimum balance required. If your KYC is ready, you can connect the app to your banking account and begin trading almost immediately. Another third-party app is Webull

As always, we recommend doing your due-diligence before using any of the above methods to invest. Each potential avenue has its own pros and cons and may not be suitable for all investors.


Finally, how can I invest in India?

India began allowing foreigners to invest in the country through 2 major categories: Foreign Direct Investment (FDI) & Foreign Passive Investment (FPI). FDI entails active involvement with the management of your investment, whereas FPI is a passive form of investing. 

There are a number of avenues if you’re interested in investing in the Indian stock market. Remember, everyone’s situation is unique - but these are a few, overarching guidelines. 


Avenue 1: Invest in ADRs & GDRs

American Depository Receipts & Global Depository Receipts are blocks of shares of foreign companies that are reissued in the domestic stock market - thereby allowing residents to access them. Indeed, some of the largest companies in India have their shares listed on U.S. & U.K. stock exchanges; these companies include Infyosys, HDFC, MakeMyTrip, Tata Motors, and Sify. 

These depository receipts can be bought through brokers and may also be available on trading platforms. ADRs are listed on the NYSE and NASDAQ, and GDRs are listed on the London Stock Exchange (LSE). 

Indian stocks can also be bought directly from the NSE or BSE in an international account, through brokerages such as Charles Schwab & Fidelity - although you’ll incur commissions, fees, and currency conversion costs so be extremely mindful of any hidden charges and costs. 


Avenue 2: Open an Account with an International Broker 

Interactive Brokers, a U.S.-based brokerage firm, has a presence on the National Stock Exchange - and allows individuals to trade Indian stocks, indices, stock options, and futures that are listed on the exchange. They customize the account structures for Indian residents living in India, and for NRIs (non-resident Indians) living abroad. Through IB, Indian traders can access the NSE regardless of their location. 


Avenue 3: Invest in Indian mutual funds & ETFs

Investing in ETFs and mutual funds can be an excellent way to gain exposure to Indian stocks; they have the added advantage of diversification and passive management. Some of the top ETFs that include Indian stocks include:

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