A dear friend who is a Tech Whiz (Thank you, B – I owe you!) suggested me to shift to WordPress from Blogger. He said that if I am serious about writing the blog (Hell yeah! I totally mean business) then WordPress would be better for earning from the blog (Who can say no to more moolah?) and also to monitor the blog (Yup, I know you were here, I am so grateful). So here I am, at this new address (Cannot forget to mention you, A- Thank you for working hard to make this happen). So, please Like, Subscribe and Follow my blog.
In other news, husband is still not pleased. Now apart from his unhappiness about being my editor (Proof reader job has been forcefully seized by Daughter at Rs.100/m), he disliked my last post. He thought the topic was too basic. So, today I am going to write about something unusual (Gotta impress him, People) and about which many do not know i.e., ‘Invest in US market directly through NSE’.
WHAT DO YOU MEAN?
- Earlier if someone wanted to buy shares of US entities, it had to be through registered broker in US (quite cumbersome process) or through Mutual Funds investing in US markets. SEBI recently approved NSE IFSC (International Financial Service Centre – subsidiary of NSE) to trade in US stocks.
- This means that now Indian Investors will be able to trade in US stocks directly.
- Trading has started from 3rd March at GIFT City, Gandhinagar.
HOW CAN I DO THAT?
- Investors will be able to make transactions through NSE IFSC’s registered brokers (36 brokers as of now).
- Open a trading and demat account with any of these and you are good to go (You will need to get a KYC done and complete documentation for the Liberalised Remittance Scheme with the bank but hey, no pain, no gain!)
OK, I AM INTERESTED. WHICH STOCKS I CAN INVEST IN?
- Currently eight US entities will be traded which will increase gradually to a total 50 largest stocks.
- The
stocks currently trading are
- Alphabet (Google)
- Amazon
- Tesla
- Meta Platforms (Facebook)
- Microsoft
- Netflix
- Apple
- The
stocks that will be added soon are
- Berkshire Hathaway (A Warren Buffet company)
- Mastercard
- JP Morgan Chase
- Morgan Stanley
- Nike
- Paypal
- Pepsico
- Pfizer
- Intel
HOW MUCH CAN I INVEST?
- Investments will be done in USD.
- Limit of total investments is currently set at $2,50,000 (approx. Rs. 1.9 Cr @ INR 75 per USD) by RBI under LRS route.
WILL I GET SHARES DIRECTLY INTO MY DEMAT ACCOUNT?
- US companies are not getting listing in India but Market Makers will buy shares on Investor’s behalf and issue receipts to investors against them.
- Investors will receive NSE IFSC receipts for their purchase that will be their proportional ownership in that company.
- The receipts will be provided in a certain ratio e.g., 1 Share of Tesla will be = 100 receipts so Investors will have the option to trade in fractional quantity value when compared to the underlying shares traded in US markets.
WHAT ABOUT TAX?
- Any long-term capital gains arising from sale of such stocks is taxable at the rate of 20% (plus applicable surcharge and cess), if held for more than 24 months. If held for up to 24 months than gain arising from sale of such stock is taxed as ‘short term capital gain’ at normal tax rate applicable to the Indian resident.
WHAT’S IN IT FOR ME?
- NSE IFSC platform will provide an opportunity to Indian Investors to invest in US stock market at low cost and with ease.
- It will also provide good diversification opportunity.
THERE MUST BE A CATCH
- Nothing good comes without any risk (If this blog doesn’t work, I can change my career path and become a life guru), Investing in depository receipts carries exchange rate risk, price risk, liquidity risk, and settlement risk.
-FORAM
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