As the world becomes more interconnected, Indian investors are increasingly looking to diversify their portfolios by investing in international stocks. By investing in stocks listed on foreign exchanges, Indian investors can gain exposure to global markets, access high-growth companies, and hedge against domestic market volatility. This article will guide you on how to buy international stocks from India, explaining the different methods available, the steps involved, and key considerations to keep in mind.
Why Should You Invest in International Stocks?
Investing in international stocks offers several advantages. Global markets provide investors access to different industries, economic cycles, and currencies, helping to mitigate risks associated with investing solely in the Indian market. Here are a few key reasons why investing in international stocks can be beneficial:
1. Diversification
One of the primary reasons to invest in international stocks is diversification. A diversified portfolio, with investments spread across different geographies and sectors, can reduce overall risk. For example, U.S. tech companies such as Apple, Microsoft, and Tesla have seen significant growth, while Indian markets may be more focused on traditional industries like banking and manufacturing.
2. Access to High-Growth Markets
The global economy is home to many fast-growing markets. By investing in international stocks, Indian investors can tap into high-growth sectors, particularly technology, healthcare, and renewable energy. The U.S. stock market, for instance, has been a leader in technology innovation, and many international companies are leading in emerging technologies.
3. Currency Diversification
Investing in international stocks gives Indian investors exposure to foreign currencies. This is particularly important as fluctuations in the Indian Rupee (INR) can impact the returns of a portfolio consisting solely of Indian assets. Having investments denominated in other currencies, such as the U.S. Dollar (USD), can provide a hedge against currency risks.
4. Higher Return Potential
While Indian stocks can provide strong returns, investing in global markets can offer additional opportunities for growth. Some international stocks have a proven track record of delivering consistent returns, especially in sectors like technology, healthcare, and consumer goods.
How to Buy International Stocks from India?
In recent years, investing in international stocks from India has become easier thanks to advancements in technology and financial services. There are several methods for Indian investors to buy stocks in global markets, each with its own set of advantages and processes.
1. Opening an International Brokerage Account
One of the most common ways to buy international stocks from India is by opening an account with an international brokerage. Several global brokerage firms allow Indian investors to trade on major international stock exchanges, such as the New York Stock Exchange (NYSE), NASDAQ, London Stock Exchange (LSE), and others.
Choosing the Right Brokerage
To open an international brokerage account, you need to choose a platform that supports Indian residents and provides access to international stock markets. Some of the most popular international brokers for Indian investors include:
Interactive Brokers: Interactive Brokers is one of the most well-known platforms for international investing. It provides access to over 135 markets around the world, including the U.S., U.K., Hong Kong, and more. The platform offers a wide range of stocks, ETFs, and other investment products.
Charles Schwab: This U.S.-based broker allows Indian investors to access international stock markets. It provides competitive fees and a user-friendly platform for buying and selling stocks.
TD Ameritrade: TD Ameritrade is another popular choice for Indian investors looking to access U.S. markets. It offers a robust trading platform and a wide selection of international stocks.
How to Open a Brokerage Account
To invest in international stocks via a brokerage account, follow these steps:
Research and Select a Broker: Choose an international brokerage firm that allows Indian residents to open accounts and offers access to the stock markets of your choice.
Complete the KYC Process: Brokers will require you to complete Know Your Customer (KYC) verification. This process typically involves submitting proof of identity, address, and other documents.
Fund Your Account: Once your account is open, you can fund it via wire transfer or other payment methods. Some brokers also allow you to fund the account in Indian Rupees, which is then converted into the local currency of the market you are investing in.
Place Orders for International Stocks: After funding your account, you can start placing buy orders for international stocks. Most brokers provide access to major international stock exchanges, including those in the U.S., U.K., and European markets.
2. Investing Through Indian Platforms Offering Global Stocks
Another way to invest in international stocks from India is through Indian investment platforms that offer access to global stock markets. These platforms allow you to buy international stocks or exchange-traded funds (ETFs) directly from India, without the need to open an international brokerage account.
Some of the leading Indian investment platforms offering global investing options include:
Groww: Groww is a popular platform that provides access to U.S. stocks and ETFs. Through Groww, you can invest in companies listed on the U.S. exchanges such as NASDAQ, NYSE, and others. The platform allows for seamless integration with your Indian bank account and simplifies the process of trading international stocks.
Zerodha: Zerodha, one of the largest stock brokers in India, has partnered with Interactive Brokers to offer access to international markets. Using Zerodha’s platform, you can invest in global stocks through Interactive Brokers, which gives you exposure to U.S., U.K., and other global markets.
Upstox: Upstox also offers an easy way to invest in international stocks through its platform. By linking up with international brokers, Upstox gives Indian investors access to a wide range of international securities, including stocks and ETFs from global markets.
How to Invest in Global Stocks Through Indian Platforms
Sign Up for an Account: First, create an account with one of the Indian platforms that offers access to global markets.
Complete the KYC Process: Just like with international brokers, you will need to complete the KYC process by submitting necessary identification and address proofs.
Transfer Funds to Your Account: After your account is set up, fund it using your Indian bank account. The funds will typically be converted into the required foreign currency (such as USD).
Buy Global Stocks: Once your account is funded, you can choose from a list of international stocks or ETFs. You can place orders to buy stocks listed on U.S., U.K., or other global exchanges.
3. Through Mutual Funds with Global Exposure
If you prefer a more hands-off approach, investing in mutual funds that focus on international equities is another option. Many Indian mutual fund companies offer products that invest in U.S. stocks or global equities, including those listed on the NASDAQ and other major stock exchanges.
These mutual funds typically pool money from multiple investors and invest in a diversified portfolio of international stocks. They are managed by professional fund managers, making them an ideal choice for investors who want exposure to international markets but don’t want to actively pick individual stocks.
Some examples of mutual funds with international exposure include:
Franklin Templeton U.S. Opportunities Fund: This fund invests primarily in U.S. stocks, providing Indian investors access to leading U.S. companies.
ICICI Prudential U.S. Bluechip Equity Fund: This fund focuses on investing in large-cap U.S. stocks, including companies listed on the NASDAQ and NYSE.
SBI U.S. Equity Fund: This is another option that gives Indian investors exposure to U.S. equities, particularly large, blue-chip companies.
How to Invest in Mutual Funds with Global Exposure
Choose a Mutual Fund: Research and select a mutual fund that invests in international stocks or equities.
Open an Account: You can invest in mutual funds through platforms like Groww, ETMoney, Zerodha Coin, or directly with the fund house.
Invest in the Fund: After opening the account and completing the KYC process, you can make a lump sum investment or set up a Systematic Investment Plan (SIP) for regular contributions.
Key Considerations When Investing in International Stocks
Investing in international stocks from India offers a host of opportunities, but there are also some key factors to consider before you start:
1. Currency Risk
When you invest in foreign stocks, you are exposed to currency risk. The value of the foreign currency, such as the U.S. Dollar, can fluctuate relative to the Indian Rupee, which can impact your returns.
2. Taxation
Investing in international stocks has tax implications. Indian investors are required to pay tax on global income, including dividends and capital gains. Be sure to understand the tax rates on foreign investments, including any applicable taxes on dividends and long-term or short-term capital gains.
3. Transaction Fees
While international brokers and Indian platforms offer convenient access to global markets, they often charge transaction fees. These fees can include brokerage charges, currency conversion fees, and other administrative costs. It’s essential to factor these costs into your investment strategy.
Conclusion
Investing in international stocks from India is no longer a complicated process. Whether you choose to open an account with an international brokerage, use an Indian platform offering global stock trading, or invest through mutual funds, there are plenty of ways to gain exposure to international markets. However, before you invest, it’s important to understand the associated risks, such as currency fluctuations, taxes, and transaction costs. With proper research and a thoughtful approach, investing in international stocks can provide Indian investors with a valuable opportunity to diversify their portfolios and access high-growth markets.
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