Get surprise! By reading the title – Yes, you heard it right. You can invest in the foreign stocks from India. Now, let’s take a look what are the ways and how you can invest in the foreign stocks.
Before we directly jump to how to invest in foreign stock market.Such thing that should be clear to you is:
How Much can Indian Investors Buy Foreign Stocks?
The Reserve Bank of India (RBI) allows an individual Indian Citizen to remit U.S. $250,000 per financial year. With the current exchange rate. This amount turns out to be over crores. Suppose, if you have 2 family members, you can invest 2× $250,000 = 500,000$.
- Ready to pay high charges: If you wish to invest in foreign countries, you will be transacting in foreign currencies. Now, if you are investing in the US Stock market, you have to pay charges and brokerage in the USD.
- As per the currency exchange rate profits may increase or decrease. For example, when you bought stock from US Stock exchange, at the exchange rate of 1$ = 70₹. After one year when you sold the US Stock, at the exchange rate of 1$ = 64₹. In this kind of situation, you have already lost 8.8 % due to changes in exchange rate. This is one of the most important things that you need to keep in mind while trading in the foreign stock market.
Step by step Process of Investing in Foreign Stocks:
- Open a trading account: To invest in foreign stock market you need to open trading account with brokerage house that provide overseas trading facility. There are few popular brokerage houses that provide service for overseas trading:
- ICICI Direct , Kotak Securities, HDFC Securities, Reliance Money, etc. This brokerage house has made it very simple to open your overseas trading account with foreign broker.
- Submit duly filled separate account opening form along with know your customer (KYC) documents.
- You need to transfer money to the international partner of the to the domestic equity broker through whom the service is provided.
- To transfer the funds the process can be done through:
- Submit application cum declaration forms under LRS,
- From A2 (That is available with your broker)
- Sign a form for Foreign Exchange Management Act (FEMA) declaration
- Form authorizing the designated bank branch as authorized dealer.
- Now you can start buying and selling foreign stocks through online platform.
Second option to Invest in Foreign Stocks:
Global Mutual Funds/ Exchange Traded Funds
Another option to invest in foreign stock market is invest in international mutual funds. There is no limit for investing in these funds unlike direct investment.
This is the easiest method to invest in foreign stocks. The biggest advantage of invest in mutual funds is to you don’t need to open any overseas account.And also invest in Mutual funds/ ETFs is cheap in compare to direct investment in foreign stock market. In India there are few mutual funds who are trade in global equities are:
- Reliance US Equity Opp. Fund DP (G)
- ICICI pru US Bluechip Equity – D (G)
- Edelweiss Greater China Equity – Direct
- Kotak US Equity Fund – Direct (G)
Investing in the foreign market will help you to invest in your favourite companies without boundaries. It is not that much difficult to invest in stock market in the era of internet. No matter, there are high charges applicable but overall advantages are there to invest in foreign stock market.
I am Hitendra Dixit. I am a civil engineer, at the age of 47 I have changed my profession and came in to stock market. I got excellence award for best share market training institute in India. I provide training in live market, during training sessions I do trade with real money in front of members. Many of my members left their job and became a professional trader with my support and guidance.