A Quick Guide on how to invest in Foreign Stocks from India: Apple, Google (Alphabet), Intel, Facebook (Meta Now), Amazon, Netflix, Microsoft, Samsung, Tesla, Twitter… These are some well-known companies in the world. We all have grown up using the products/services offered by these companies.
Moreover, these companies are global leaders in their respective businesses, as well as innovators, who are likely to benefit in the future. But along with using their products, can we also own some shares of these companies?
Wait, these are not Indian companies, right? Therefore, they won’t be listed on the Indian stock exchanges. Even if you have a Demat and trading account in India, you can trade/invest only in companies listed on Indian stock exchanges (BSE/NSE).
But these companies will be listed in their respective country’s stock exchanges like US stock exchanges. Then, how to buy shares of a company that are not registered in India, but trades in the foreign stock exchanges?
Don’t worry, if you really want to buy these stocks- you’ll get it. In this post, we are going to discuss three simple ways through which you can invest in foreign stocks. Let’s get started.
Why should you invest in foreign stocks?
Before we start this post, let us first discuss why should you invest in foreign stocks? Are they better than Indian companies? Here, you need to make up your mind why you want to invest in foreign companies.
There are over 5,500 listed companies in the Indian stock market. Aren’t they enough? Why do you need to invest in alternative stocks? Further, which one is better to invest in- Indian companies or foreign companies?
Well, We are not really in a position to answer the second question. It won’t do justice if a guy in his 20s sitting on the comfort of his couch judges these Indian vs MNC companies and choose which one is better.
These are giant multi-billionaire companies that we are talking about here. Google, Apple, Facebook, Amazon, Samsung, Cisco, Tesla, etc are too big companies to comment upon. These companies have lots of cash, highly qualified professionals, employees in their management team and they are big innovators in their industry.
Anyway, there are even many big Indian companies that can give competitions to many foreign companies. Now, let us answer the first question i.e. why invest in foreign stocks. Here are my personal learnings on this question.
Top reasons why many Indian invests in the US
Here are my top reasons why many Indians invests in the US or other foreign stock exchanges:
1. People want to invest in their favorite companies
Apple, Google, Twitter, Facebook, Amazon, Tesla, etc. are the darlings of this generation. And of course, many people want to invest in these companies.
2. Diversification with Global Investments
Investing in foreign stocks helps in diversification. Let’s assume that the Indian equity market starts falling due to some local region. However, investing in foreign stocks can mitigate the risk in your portfolio as the local reason may not have a significant effect on the international markets.
3. To seize bigger opportunities
Once you start to invest in foreign stocks, there are no boundaries anymore. You can hunt for better (profitable) opportunities in the international markets.
Besides the above-mentioned points, few investors believe that foreign companies have better resources, facilities, government cooperation, and standards. That’s why they invest in these foreign companies, compared to Indian companies.
Nevertheless, while deciding to invest in foreign stocks, you should also remember that India is one of the fastest-growing economies in the world. On the other hand, most of the international markets are a little saturated. Therefore, growth-wise, India has better potential.
Overall, it totally depends on your preference regarding where and how much to invest. As already discussed, there are both pros and cons to trade in international stocks.
Cons of Investing in Foreign Stocks
There are two sides to every coin. Here are a few critical points to know before you invest in foreign stocks:
1. Be ready for the high charges
While investing in international stocks, you’ll be transacting in foreign currencies. For example, if you are trading in the US stock market, you have to pay the brokerages in the US dollar.
And hence, the stock brokerages may be a little higher compared to the charges in the Indian stock market. Similarly, the annual/monthly maintenance charges may also be higher compared to domestic accounts.
2. Profits are subjected to the currency exchange rate
When you invest in foreign stocks, there’s always currency risk involved. Let us understand this with the help of an example.
Let’s assume that you are investing in the US stock market. When you bought the US stock, the currency exchange rate was $1= Rs 68. However, next year- when you sold the US stock, let say the Indian currency got stronger, and the currency exchange rate becomes $1 = Rs 62.
In such a case, you have already lost 8.8% due to the change in the exchange rate. That’s why when you invest in foreign stocks, profits are always subjected to the currency exchange rate.
3. Up to $250,000 can be invested overseas by the Indian residents
As per the RBI notification in the Liberalised Remittance Scheme (LRS), an Indian resident individual can only invest up to $250,000 overseas per year. With the current exchange rate of ($1= Rs 68), this amount turns out to be over 1.7 Crores. Anyways, if you have a family of four, you can invest 4 x $250,000 = $ 1 Million. That’s enough money to invest, right?
Quick Note: Besides the above factors, you also need to keep in mind the foreign stock risks. As these stocks will be listed on foreign stock exchanges – the environment and the factors (like local government policies, local trends, etc) will affect the share price of those companies.
How to invest in foreign stocks?
Now that you have learned the basic concept of investing in the international stock exchanges, here are three simple ways to invest in foreign stocks—
1. An account with Indian Brokers having a tie-up with a foreign broker
Many full-service Indian brokers like ICICI Direct, HDFC Securities, Kotak Sec, Axis Securities, Reliance money, etc has a tie-up with the foreign brokers. They have made it very simple to open your overseas trading account with their partner (foreign) brokers. You can invest in foreign stocks using these full-service brokers.
For example, if you have an account with ICICI direct, you can invest in global markets using their broker partner Interactive Brokers LLC.
(Source: ICICI Direct)
2. Open an account with the foreign brokers
A few international brokerage firms like Interactive Brokers, TD Ameritrade, Charles Schwab International Account, etc permit Indian citizens to set up an account and trade in US stocks, mutual funds, etc.
In fact, US-based brokerage like ‘Interactive brokers’ also has an office in India where you can visit, get your queries answered, and open your overseas trading account.
3. Investing in Foreign stocks through new startups Apps
In the past few years, many new starts have been launched in India and abroad that helps Indians to invest in foreign stocks. For example, GROWW, Vested Finance, Webull app, etc help Indians to invest in US stocks.
Startups like Vested Finance are a US Securities and Exchange Commission (SEC) registered investment advisor. Similarly, you can also invest in foreign stocks using the Webull app, another popular startup company that is also committed to building the best investing and trading experience for India and Global stock markets.
Extra: Buying Indian MF/ETFs with global equities
There are a number of mutual funds/ETFs that invest in international markets (global market, emerging market, etc). You can invest in those mutual funds/ETFs to indirectly invest in foreign equities.
This is the easiest approach to invest in foreign stocks. An advantage of investing through mutual funds is that you won’t need to open any overseas trading account. Further, you won’t also require to invest a hefty amount.
Compared to direct investing in foreign stocks (where you might be asked to maintain a minimum of $10,000 deposit), investing in mutual funds/ETFs are cheap.
For example, Motilal Oswal recently started its subscription for its Motilal Oswal S&P 500 Index Fund. It is an open-ended scheme replicating the S&P 500 Index, which consists of leading 500 companies listed in the US. A few of the popular of popular mutual funds that trade in global equities are—
- ICICI Pru US Bluechip Equity – D (G)
- Motilal MOSt Oswal NASDAQ 100 ETF
- Reliance US Equity Opp. Fund DP (G)
- Edelweiss Greater China Eqty-Direct
- Kotak US Equity Fund – Direct (G)
Quick Note: Many other Indian stockbrokers are also planning to offer their clients a facility to invest in the US and foreign stocks. For example, Zerodha is planning to offer option to invest in US stocks with no minimum investment.
However, these features are yet to be launched. Nevertheless, these stockbrokers internally working on these features is a good sign for the Indian retail investors who are enthusiastic about investing in foreign companies.
FAQs on Investing in Foreign Stocks from India
1) Can I invest in foreign stocks from India?
Yes, you can invest in foreign stocks from India. Global companies like Apple, Amazon, Microsoft, Google, Tesla, etc are listed on the US/ foreign stock exchanges and Indians can legally buy foreign stocks.
According to the RBI’s Liberalized Remittance Scheme (LRS) guidelines, an Indian resident can annually send up to USD $250,000 abroad without seeking approval from the RBI. The LRS has made it easier for Indian residents to make investments in other countries.
2) What is the easiest way to invest in foreign stock?
You can invest in foreign stocks from India by opening an account with Indian brokers that allow investment in foreign stock or might have a tie-up with the foreign brokers. Else, you can directly open an account with foreign stockbrokers like Interactive Brokers, TD Ameritrade, Webull, Charles Schwab International Account, etc, and start investing in international stocks.
Another easy way to invest in foreign stocks is through the mutual fund’s route where investors can buy Indian mutual funds or ETFs with global equity holdings.
3) Can I own foreign stocks?
Yes, you can own foreign stocks. Instituted by the RBI, the Liberalized Remittance Scheme (LRS) is a set of policies that governs the maximum amount and purposes of remittance. Under the LRS, an Indian resident can annually send up to USD $250,000 abroad. In short, you can invest in international companies and own foreign stocks.
4) How can I invest in Nasdaq from India?
Nasdaq is an American Stock Exchange based in New York. Indians can invest in companies listed on Nasdaq from India. Nasdaq” also refers to the Nasdaq Composite, an index of more than 3,000 stocks listed on the Nasdaq Exchange that includes Apple, Google, Microsoft, Meta (formerly Facebook), Amazon, and Intel, and more. India investors can invest in Nasdaq from India.
5) Can you buy stocks listed in other countries?
Yes, you can buy stocks listed in other countries like the United States, South Korea, Australia, Japan, Europe, etc. There are thousands of stocks listed in other countries’ stock exchanges like Nasdaq, Tokyo stock exchange, Korea Exchange, Euronext, and more. Indian investors can buy stocks listed in other countries’ stock exchanges.
6) How to invest in international stocks from India?
You can invest in international stocks from India by opening an account with Indian brokers that allow investment in foreign stock or might have a tie-up with the foreign brokers, directly opening an account with foreign stockbrokers or through a global mutual funds route.
7) What are Foreign stock brokers in India?
A few top international brokerage firms that permit Indian citizens to set up an account and trade in US stocks are Interactive Brokers, TD Ameritrade, Charles Schwab International Account, Webull, etc. In addition, many Indian stockbrokers have a tie-up with foreign brokers to facilitate international investments like ICICI Direct, Kotak Securities, etc.
8) What is the taxation rate on foreign stocks?
While investing in foreign stocks, Long term capital gains arising from the sale of foreign stocks attract tax at the rate of 20% plus surcharge and health and education cess along with the benefit of indexation. On the other hand, Short-term capital gains arising from the sale of foreign shares are taxed at the slab rate applicable to taxpayers.
10) Can I do intraday trading for foreign stocks?
Several brokers and startup apps offer investment in foreign stocks from India. However, an intraday trading facility in most foreign stocks is not available due to regulatory requirements. To carry out your intraday trading, you will need an overseas trading account.
In this article, we discussed three easy ways to invest in foreign stocks from India, along with the fourth way of mutual funds route. We also covered the advantages and disadvantages of investing in foreign stocks.
Investing in the foreign market will help you widen your investment horizon. Here, you can invest without boundaries in your favorite companies. Moreover, in the era of the internet- it’s not much difficult to invest in the international market.
The most significant advantage is that it helps in diversifying your portfolio. However, the obstacles are higher expense charges and currency exchange rates.
That’s all for this article on different ways to invest in foreign stocks. Let us know what you think about investing in international stocks in the comment section below. Further, if you’ve got any questions on this topic, feel free to mention them below. Have a great day and Happy investing.
Kritesh (Tweet here) is the Founder & CEO of Trade Brains & FinGrad. He is an NSE Certified Equity Fundamental Analyst with +7 Years of Experience in Share Market Investing. Kritesh frequently writes about Share Market Investing and IPOs and publishes his personal insights on the market.
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Good article. Just heard a webinar proceedings of Interactive Brokers, Mumbai and found their brokerage charges are very small/ reasonable, just $0.005 per share (Min $1).
The timing is one deterrent, as it works 7 p.m. to 1.30 a.m. (Night shift working?)
Planning to open an account to trade Nasdaq stocks.
Major advantage is that the US cos. are more controlled and reliable with less manipulations.
Hi Mr. Gopinath. The charges of interactive brokers really seems reasonable. Further, the time difference is also a minor issue while trading in the international stocks. Forgot to add this point to the article. Thank you for mentioning it. And happy investing in NASDAQ stocks.
I want to know about the indian brokers offering to invest in foregin markets and what are the prodecure i have to do so
Some major Risks associated with investment in US equities are left out. For example, in case of death of the invester, USA charges 40% Estate tax & hence his nominee gets just 60% which is not the case in Indian stock investment. Most people are unaware of this major risk.
Talking about inheritance upon death will it still be payable if you have your own sibling in the same foreign country and willed to the sibling ?
To add, if you invest directly in foreign companies, the foreign income (including dividends) have to be declared as income while filing income tax in India. And to claim TDS, Form 67 has to be filled. W-8BEN has to be filed in US (once in 3 years) for tax purposes. All these processes are cumbersome.
Hi Mr. Ramesh. Yes, the investing process in foreign stocks is little cumbersome as two countries with different stock exchanges and different tax rules are involved. Thank you for adding the point. Cheers!!
thanks for EBOOKS !
are forex tradings safe?trustworth? like xforex,+500
Aapki post dekh ke mujhe bhi ek baat yaad aa gyi – kehte hai koi bhi dhanda chota nai hota, aur dhande se bada koi dharam nai hota!
Dear author, am trading in indian market for around a decade..the problem here is – manipulation , operators -this made the stock market here totally blind, sometimes even no value for fundamental studies also..so i wish to try some foreign to find out how things work there !
Minimum Deposit amount is too high in icici direct 10,000$
Now in india margin r to high for option writer . and return r decrease and risk is also involved. After that u have to pay 30% tax
Great article, Kritesh.
There’s another workaround by using Crypto to trade via Hox.com. They use USDT to trade in the US stock market. We could convert Fiat to Crypto via Indian platforms like WazirX and use Hox app. Easy peasy!
You should add this one as the fourth method.
Nice article on Foreign Investments for Indian investors & for people wanting to know about the same.
The main drawback in foreign stock investment is clearly discussed above as stock brokerage is very high in paying through foreign dollars especially when we make a tie up with U.S.A even I faced the same problem when i invested in american stocks…..
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Thanks for the informative post, Rajat sir. I found two-three direct investing platforms that can be used to invest in USA markets like http://www.stockal.com, https://www.hdfcsec.com/globalInvesting, Vested.co.in.
How does the taxation work for these types of investments sir?
Can direct investment platforms such as stockal, vested, etc be also used? They are offering some good pricing
I am using vested.very easy very cheap….NO commision as of now….
I was also looking for a comparison between stockal and vested, and I found a really good global investment platform that lets you buy international shares from India. You can also try- https://www.globalise.co/
What About Vested Finance? Can you Give us some information About it., It is also platform that allow you to invest in US Stock market…Please tell us If you know about this platform. Thank you.
invest onli corporation
I want to learn Investing But I dont know where from i Learn Investing Tell me the Best And Easy Way to Learn Investing Thankyou !
Trade Brain !!
Investopedia is the best source for learning .
Which platform is better for trade US stocks and commodity ?
Hi… I got to read this article today and it was quite informative. I have one question. What is the minimum deposit that one is supposed to keep for Interactive Brokers or Kotak Securities? Is it right that for IB, an Indian investor needs to have a minimum deposit as USD 2000?
Ib recently banned all options trades(buying ,selling) for indian citizens
any idea on how to buy leaps/options internationaly would be welcome
disc;im currently a customer of IB
is this temporary? any more info on this from them?
Can you pls share the example details of option & futures commissions, fees etc.. i am unable to figure out with their explanation in their website.
Also, planning to open an account in IB for Investing and trading as well. What will be your suggestion as a existing customer.. can it be compared to our indian brokerage like zerodha interms of brokerage etc?
you can use webull
this is very useful info sir
What if the Indian resident would like to invest in a start up company in Canada, which is yet to be listed. Investment would be in a combination of Equity and Debt. Total investment would be around $200k.
What would be the process and time line to make such overseas investment?
Hi I need help to open an account to trade a foreign company share.can someone assist
I am planning to open Ameritrade tarding account in from India.
Pls let me know if an indian staying in india is allowed to DAY TRADE in US markets ??
Very nice article about how someone can invest in the foreign market from India
“Kehte hain agar kisi cheez ko dil se chaho … The article is good – why do you have to be so cheesy about it though?
Being engineer how did u learn about trading. Can u give some ideas about how to become a nse analyst.
Thank you very much Karthik
I am interested in investing US Mutual Funds what are thoughts on ‘Interactive Brokers’ and are there any options for Indians to invest in US mutual funds directly.
Interested in Vanguard Mutual Funds.
As an Indian investor, investment in the US stock market provides diversification to your portfolio and prevents it from being susceptible to India-specific shocks.
BSE subsidiary indiainxga started global equities platform and providing direct access of more than 135 exchanges
I am basically analyzing the stock of the USA market. Good information is provided in this post about Investing in Foreign Stocks from India. Thanks
Thanks for sharing this great article for the investor or planning to invest.