Invest in US Stocks from India

US stocks services on INDmoney are provided by INDmoney global IFSC (Private) Limited that is a registered member of NSE International Exchange (NSE IX) and regulated by IFSCA in Gift city, India.

Your US Stocks 'Global access' accounts are created with regulated US brokers, such as DriveWealth LLC and Alpaca Securities LLC, which are overseen by the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). Your investments are protected by the Securities Investor Protection Corporation (SIPC) for up to $500,000, including $250,000 for cash claims.

Your US stocks 'Direct access' accounts are created with INDmoney global IFSC (Private limited) wherein the securities are held in a Demat account in the International zone, i.e the Gift City. 

US stocks can only be bought overseas in dollars. Hence, to facilitate your investments in US stocks, you will need to convert INR to USD and hence remit it to your US stocks wallet. This entire process is paperless and digital. 

Transferring money to your US stocks investment account is very different from transferring to your Indian stocks account. For transfering money to your US stocks wallet, you need to first exchange your Rupees with USD and then undertake the remittance under RBI’s LRS scheme (Liberalized Remittance scheme). This process goes through various compliance checks at your bank account and the money moves via the SWIFT banking network and hence leading to a time lag of anything from 8 hours to 48 hours depending upon the bank you are using.

You can transfer as little as ₹1,000 and up to ₹2.1 crore (approximately $250,000) per year as per RBI guidelines under the Liberalized Remittance Scheme (LRS).

If you have a US stocks’ “Direct Access” account created with INDmoney Global (IFSC) Pvt Ltd, your securities are held in your demat account powered by India International Depository IFSC Ltd. in Gift City, India.

If you have a US stocks‘ “Global Access” account created with either DriveWealth LLC or Alpaca Securities LLC, your securities are held with the respective regulated broker. These brokers are regulated by FINRA and SEC and your assets are insured by SIPC up to $500K (approx ₹ 4 Cr). 

As per regulatory requirements, all remittances to US brokers must be processed through an RBI-authorized bank. The bank is responsible for conducting various statutory checks in compliance with prescribed guidelines before processing the remittance.

If your relationship with the remitting bank is less than one year, regulations require the bank to obtain either a one-year bank statement or an income tax return acknowledgment from you to complete the necessary statutory checks. This ensures that all regulatory standards are met before your remittance is processed.

Since your money is in an overseas bank in dollars, bringing money back into India involves various statutory steps.

Once you place a withdrawal request, the broker instructs the bank to send your dollars to India via the SWIFT international banking network. Once the money hits the Indian bank, the bank has various statutory checks before they convert the dollars into rupees and credit your bank account. 

While INDmoney has made this process a seamless single-click experience for you, the various steps involved can take 2-5 working days to credit into your bank account.

Withdrawal charges are free for investors who have opened a free savings account in Federal Bank on INDmoney. For Federal Bank’s savings account, INDmoney has built rails between the US broker and Federal Bank, enabling you to get withdrawals at Zero Fee.

However, when you are withdrawing to another savings account (any bank other than Federal Bank), the US broker charges a fee of $5. We are actively working to build more rails.

No, Indian residents are not allowed to do intraday trading or derivative trading in US stocks due to regulatory restrictions.

The US stock market is home to some of the world’s most renowned indices, which track a collection or basket of stocks listed on major exchanges such as the New York Stock Exchange (NYSE) and NASDAQ. These indices group together stocks based on specific criteria, such as market capitalization, industry, or sector, providing investors with a clear snapshot of the overall performance of that group. By analyzing these indices, investors can better understand market trends, gauge economic health, and make informed investment decisions. Let’s explore the most popular indices in the US stock market:

1. S&P 500 (Standard & Poor's 500): The S&P 500, short for the Standard and Poor’s 500, is one of the most widely recognized benchmarks in the stock market. It tracks 500 of the largest publicly listed U.S. companies. So, it is a key indicator of the overall market's performance. These 500 companies represent about 80% of the market value of all U.S. public companies.

The S&P 500 is a snapshot of the U.S. stock market. It reflects the performance of the largest companies. Global companies such as Apple, Nvidia, Microsoft, Amazon, and Tesla are included in the S&P 500. Additionally, investors use this index as a benchmark for U.S. stocks and mutual funds & ETFs aim to match or beat its performance.

2. Dow Jones Industrial Average (DJIA): The Dow Jones Industrial Average (DJIA), or "The Dow," is one of the oldest and most iconic U.S. stock market indices. It dates back to 1896. DJIA tracks 30 large, publicly owned blue-chip companies which represent a cross-section of major industries. Companies like JP Morgan, Coca-Cola, Visa, and Goldman Sachs are a part of the Dow.

A key difference from other indices is the way the Dow is calculated. It uses a price-weighted methodology, meaning that companies with higher stock prices have a greater impact on the index's value, regardless of their market capitalization. In contrast, indices like the S&P 500 use a market-cap-weighted system, where companies with larger market capitalizations have more influence.

3. Nasdaq Composite: The NASDAQ Composite Index represents all domestic and international stocks listed on the NASDAQ Stock Exchange. It is a key index with over 3500 stocks listed across all sectors including companies like Alphabet (Google), Meta (Facebook), Pepsi, T-mobile, Costco and more. 

The NASDAQ Composite Index is tech-heavy, with other important sectors like consumer goods and healthcare also having considerable weightage. It is a market capitalization-weighted index, so companies with higher market values have a greater impact on its overall performance. 

4. Russell 2000: Covering 2000 of the smallest companies, the Russell 2000 provides insight into the performance of smaller, domestically focused companies. It is considered popular as it is mostly seen as a benchmark for small-cap funds which typically reflect economic changes more rapidly.

5. Nasdaq-100: The Nasdaq-100 includes only the top 100 of the largest non-financial companies listed on the Nasdaq exchange, including the likes of the biggest companies in the world which are technology firms like Apple, Amazon, Microsoft and Tesla! It’s one of the investor favorites for its focus on high-growth, tech-driven companies.

6. Wilshire 5000 Total Market Index: The “total market index” or The Wilshire 5000 Total Market Index, despite its name, now includes about 3,400 companies. When it was created in 1974, it represented roughly 5,000 stocks, but the number has changed over time due to mergers, acquisitions, and companies going private. This index is designed to capture the performance of the entire U.S. stock market by covering a wide range of publicly traded companies across various industries. It’s a comprehensive snapshot of the market, making it a valuable tool for understanding overall market trends.

Investing in the US stock market gives investors access to global companies, the potential for strong returns, diversification, and dollar appreciation as its benefits. That being said, investing in US stocks also brings with it some risks and challenges for one to consider:

1. Currency Risk: When investing in the US stocks market, your returns are not only impacted by stock performance but also by the exchange rate between the Indian Rupee (INR) and the US Dollar (USD). If the rupee depreciates against the dollar, your returns may increase. However, if the rupee appreciates, your gains can diminish.

2. Taxation Complexity: Capital gains from US stocks are subject to tax in both India and the US. The US withholds a tax of 25% on dividends, which is deductible under the Double Taxation Avoidance Agreement (DTAA) between India and the US. Investors are supposed to report this income when filing taxes in India. Understanding and managing these tax procedures may be a challenge, especially without professional advice.

3. Regulatory and Compliance Issues: Indian investors face regulatory limitations when investing in foreign assets. The Liberalized Remittance Scheme (LRS) allows an individual to invest up to $250,000 per financial year in overseas markets. Exceeding this limit could lead to penalties. Additionally, investors must ensure they adhere to reporting requirements under the Foreign Account Tax Compliance Act (FATCA) and comply with RBI guidelines.

4. Market Volatility and Economic Risks: Global economic conditions such as inflation data releases, Federal Reserve rate hikes, or political instability can lead to significant market fluctuations. Indian investors may find it challenging to navigate these changes, especially if they are not familiar with the US economic landscape.

5. Higher Transaction Costs: Investing in US stocks typically involves higher transaction costs, including brokerage fees, foreign exchange conversion charges, and potential remittance fees which can eat into your overall returns. Some platforms offer zero commission trading, but currency conversion fees and other hidden costs can still impact your investment profitability.

6. Limited Access to Certain Stocks and ETFs: Not all US stocks and ETFs are easily accessible to Indian investors. Restrictions may apply due to regulatory issues or platform limitations. Additionally, Indian investors may not have access to certain asset classes like fractional shares or specific exchange-traded funds (ETFs), limiting their ability to diversify fully.

7. Geopolitical Risks: Investing in a foreign market exposes investors to geopolitical risks, including changes in trade policies, sanctions, and other international tensions. For instance, changes in the relationship between India and the US could impact investment regulations or tax treaties, affecting Indian investors' returns.

It’s important for Indian investors to conduct thorough research, understand the regulatory environment, and have a clear risk management strategy before diversifying into the US market.

To get the most out of your US stocks investing experience, you can consider the below mentioned tips:

1. Do Your Research: Familiarize yourself with the:

- US Stock market indices like S&P 500, Nasdaq and Dow Jones indices, which reflect the overall market trends.

- Research about the company profile, returns, earnings reports, and market outlook of companies.

- Stay updated with the latest news and trends in the U.S. economy.

You can track multiple US stocks and set custom alerts for price movements, significant events, group stocks into watchlists by sector, risk, dividends, & more with the Watchlist feature on INDmoney.

2. Diversify Your Portfolio: Avoid putting all your money into a single stock/sector and diversify your investments across technology, healthcare, financial services, consumer goods, and more. 
For instant diversification across various sectors, you can also consider exchange-traded funds (ETFs) or mutual funds.

4. Focus on Long-Term Investments: Adopt a long-term perspective to ride out the market fluctuations and benefit from compound growth. Consider dollar-cost averaging by regularly investing a fixed amount over time. This helps in mitigating the impact of market volatility.

5. Consider Tax Implications: U.S. investments are subject to capital gains tax and dividend withholding tax. As an Indian resident, your dividends will be taxed at a flat rate of 25%, which can be reduced under the India-U.S. Double Tax Avoidance Agreement (DTAA). Understand the tax implications in both countries and consult with a tax advisor to maximize your after-tax returns.

6. Choose the Right Platform for Investing: Select a reliable investment platform that is secure and offers seamless access to U.S. stocks, customer support and low transaction costs. INDmoney, for instance, allows Indians to invest in U.S. markets hassle-free and provides tools like real-time insights, portfolio tracking, and more.

7. Avoid Emotional Investing: Don’t let market news and short-term fluctuations dictate your investment decisions. Stick to your financial plan and review your portfolio periodically, making adjustments based on your goals rather than market hype.

Investing in international markets requires patience, research, and a strategic approach, but it can potentially offer significant rewards when done correctly.

An Exchange-Traded Fund (ETF) is a special type of investment that works like a mix between a mutual fund and a stock. An ETF holds a collection of different assets, such as stocks, bonds, or commodities (like gold or oil), and divides them into small units that you can buy and sell on a stock exchange.

For example, if you want to invest in technology companies but don’t want to buy individual stocks, you can invest in a Tech ETF. This ETF could include shares of companies like Apple, Nvidia, Google, Facebook, Amazon and more allowing you to diversify your money across multiple companies with a single purchase.

ETFs are popular because they are easy to trade, have lower fees than mutual funds, and help spread your risk by investing in multiple assets at once. You can buy and sell ETFs just like regular stocks, making them flexible and convenient for all types of investors.

If you are an investor from India looking to invest in the US Stock market, the market hours for you would be 7:00 PM to 1:30 AM Indian Standard Time. The US Stock Market follows the trading hours of America’s two largest stock exchanges, NYSE (New York Stock Exchange) and NASDAQ (National Association of Security Dealers Automated Quotations). US Stocks trade between 9:30 AM to 4:00 PM Eastern Standard Time from Monday to Friday. 

The US Stock Market also changes its timings to adhere to Daylight Savings Time (DST). This occurs from March to November. It’s a practice of moving the clock forward by one hour to make use of daylight hours during warmer months. During this period the US market opens and closes one hour earlier than normal hours. For Indian investors this would mean that the market opens at 6:00 PM and closes at 12:30 AM.

Yes, you can invest in US Stocks from India through INDmoney. You can do this in two ways:

(i) Direct investments in the US Stocks which means you can own a part of your favorite global brands like Meta, Apple, Google, etc; 

(ii) Indirect investment in Mutual Funds or ETFs in the US from India. 

As per the Liberalised Remittance Scheme (LRS), by RBI an Indian resident can remit up to $2,50,000 that is around 2.07 Crores for capital and current transactions and the best part is you can get started with US investing for as little as $1 (Around ₹84).

To directly invest in the US Market from India you need an overseas trading account from a domestic broker. You can do this through INDmoney. INDmoney is a registered member of NSE International Exchange (NSE IX) and is regulated by IFSCA in Gift City, India. 

To get started you need to create a US Stocks Account with INDmoney. This account allows you to access and invest in the US stock market from India. 

The first step is to exchange your rupees for dollars by funding your US Stocks Wallet. 
➡For Axis, HDFC, or Federal Bank users:

Linking is simple. Use UPI to connect your bank account and complete the transfer.

➡For other bank users:

INDmoney will guide you through a quick Federal Bank Account creation journey, after which you can transfer money easily. Learn more about how you can transfer money to your US Stock account here.

Once the funds are added to your US Stocks Wallet, you’re ready to invest in any US company you like! Explore Stocks, Mutual Funds & ETFs and start investing for as little as $1.