Summary of this article
Indian investors can buy US stocks through platforms such as Groww and Zerodha
Fractional investing lets investors buy portions of shares with smaller amounts
Currency movements, transaction charges and market volatility can affect returns
Anthropic’s proposed initial public offering (IPO) has drawn attention to the growing appetite for artificial intelligence (AI) companies and the businesses building the technology. For Indian investors, getting exposure to such companies has also become easier, thanks to discount brokerages expanding access to US stock markets.
Platforms such as Groww, Zerodha, Angel One and Upstox have introduced or expanded facilities that allow eligible Indian residents to invest in US-listed stocks and exchange-traded funds (ETFs) through their investment apps. The services operate through different arrangements under Gujarat International Finance Tec-City (GIFT City), with differences in the securities available, brokerage charges and other costs.
Investors can buy shares of companies such as Nvidia, Apple, Microsoft and Amazon, or choose ETFs tracking indices such as the S&P 500. Fractional investing, offered by several platforms, also allows investors to buy a portion of a share, sometimes starting with as little as $1.
But opening an account is only the first step. Investors should first understand how to transfer money, what charges apply and how currency movements and stock market fluctuations could affect their returns.
How To Invest In US Stocks From India
Here’s a step-by-step guide to invest in US stocks from India.
Step 1: Choose An Investment Platform
Compare the US investing facilities offered by Groww, Zerodha, Angel One and Upstox. Check the range of eligible stocks and ETFs, fractional investing options, brokerage rates, currency conversion charges and account maintenance fees, if any.
The platforms use different arrangements. Groww operates through Groww IFSC, while Zerodha routes investments through the BSE-owned India INX Global Access. Upstox and Angel One also offer access through their respective international investing arrangements. Check the latest terms on the platform you choose before opening an account.
Step 2: Finish Onboarding And Account Verification
Create an account on your platform of choice and complete the verification process. You may need to submit your Permanent Account Number (PAN), identity and address proofs, along with any other documents requested.
Link your Indian bank account and complete the remaining formalities to start investing. The requirements vary across platforms.
Step 3: Determine How Much To Invest
Decide how much you can afford to invest in overseas stocks before transferring money. The RBI’s Liberalised Remittance Scheme (LRS) allows resident individuals to remit up to $250,000 per financial year for permitted transactions. The limit covers other eligible remittances too, not just stock market investments.
Take stock of your existing investments and financial goals before deciding how much to put into US markets. Be prepared for losses if share prices fall.
Step 4: Fund Your Account
Send money using the funding process on your platform. Investments are generally funded in dollars, so the rupee amount debited will depend on the applicable exchange rate and conversion charges.
Before you confirm the transaction, look at the bank’s foreign exchange rate, any transfer fees and the platform’s funding charges. These costs can affect returns even when the underlying stock rises.
Step 5: Choose Stocks Or ETFs
Choose a stock and look into the company’s business, earnings and valuation before placing an order. If you don’t want to bet on individual companies, ETFs offer another way to invest. An S&P 500 ETF tracks large US companies, while a Russell 2000 ETF focuses on smaller firms. Check what the fund holds and what it charges before investing.
Step 6: Place An Order
Enter the amount you want to invest, review the order, and confirm the purchase. If your platform supports fractional investing, you can buy a part of a share rather than the whole share.
Once the purchase goes through, you can check your holdings and transaction history in the app. US markets operate on different trading hours from Indian exchanges; so check the timings before placing an order.
Risks To Consider Before Investing
Investing in US stocks comes with market and currency risks. Even if a stock rises in dollar terms, a fall in the dollar against the rupee can eat into your returns. Brokerage, currency conversion charges, taxes and regulatory fees can also add to the cost.
Investors should check how their holdings are held and what protection applies under the overseas broker’s arrangement. Eligible accounts with a member of the Securities Investor Protection Corporation (SIPC) may be covered if the brokerage firm fails and customer assets are missing. SIPC protection does not cover losses caused by market movements.
While Indian investors are offered more options with access to US markets, they should invest based on their financial objectives, risk appetite and current portfolio and not only on the buzz around a company or its IPO.
