Expanding investments beyond the Indian market by choosing to invest in US stocks from India is an increasingly popular strategy. Accessing the US market provides exposure to top global companies, diverse industries, and growth sectors that may be underrepresented in the Indian stock market. Additionally, combining this approach with active strategies, such as learning how to start day trading, can further enhance your portfolio. This article covers the benefits of investing in US stocks, the steps involved, and how including US assets can support both long-term and day trading strategies.

Why diversify by investing in US stocks?

Diversifying across international markets reduces risk by distributing investments across different economies and sectors. By investing in US stocks, Indian investors can access opportunities that are not always available in the domestic market. Here are some compelling reasons to consider this strategy:

1. Exposure to global leaders
   The US market is home to world-renowned companies like Apple, Google, Microsoft, and Tesla. By investing in US stocks, Indian investors can gain exposure to industry leaders that drive innovation across technology, healthcare, finance, and other sectors. These companies are often more stable, making them attractive options for both long-term investment and active trading.
   
   
2. Broader sector access
   Certain high-growth sectors, such as biotechnology, artificial intelligence, and green energy, are more prominent in the US than in India. Investing in these sectors allows Indian investors to benefit from trends and innovations not readily available in the local market.
   
   
3. Potential currency advantage
   Investing in US stocks means holding assets in US dollars. If the rupee depreciates against the dollar, the value of these investments can increase in Rs. terms, providing additional returns. This currency exposure adds a layer of diversification, as it acts as a hedge against rupee volatility.
   
   
4. Stable and transparent market
   The US stock market is one of the most regulated and transparent markets globally. With high standards for corporate governance and investor protection, it provides a secure and reliable environment for international investors, including those from India.
   
   
5. Geographic diversification
   By adding US stocks to their portfolios, Indian investors reduce their reliance on the Indian economy. If the Indian market experiences a downturn, having investments in the US can offer some stability, balancing risk and ensuring greater resilience in challenging economic times.

How to invest in US stocks from India

With digital platforms making cross-border investing easier, Indian investors can now access the US stock market with a few simple steps. Here is how you can invest in US stocks from India:

• Open an international trading and Demat account through Indian brokers with US market access or direct platforms, focusing on low fees, security, and ease of use.
• Use the RBI’s Liberalised Remittance Scheme (LRS) to fund your account, with an annual limit of $250,000 (approx. Rs. 2 crore), considering exchange rate impacts.
• Research stocks aligned with your goals; large-cap stocks offer stability, while tech and growth stocks present higher return opportunities.
• Be aware of tax obligations, including a 25% US withholding tax on dividends and capital gains tax in India, to ensure tax-efficient investing and compliance.

Combining US stocks with day trading strategies

For those interested in learning how to start day trading, incorporating US stocks can bring several advantages. The high liquidity and trading volume of the US market make it suitable for active trading strategies. Here is why adding US stocks is beneficial for day traders:

1. High liquidity and trading volume
   The US stock market has one of the world’s highest trading volumes, making it ideal for day traders. High liquidity allows for quick buy and sell orders without causing significant price changes, which is essential for successful day trading.
   
   
2. Extended trading hours
   US markets offer pre-market and after-hours trading, allowing Indian investors to trade outside standard market hours. This flexibility is particularly helpful for day traders, as it enables them to react to global news and economic events that might impact prices, even after Indian markets close.
   
   
3. Access to high-growth stocks
   The US market is known for its high-growth sectors, particularly in technology. Many tech stocks exhibit daily price volatility, making them suitable for day trading. Knowing how to start day trading with such stocks can provide Indian investors with opportunities for rapid returns by capitalising on short-term price movements.
   
   
4. Diverse instruments and tools
   In addition to individual stocks, the US market offers ETFs and ADRs, which provide diverse investment options for active traders. Trading platforms also provide advanced tools, such as real-time data and technical analysis indicators, that aid in informed decision-making.

Key considerations when investing in US stocks from India

• Understand tax obligations: US dividends incur a 25% withholding tax, which may be credited against Indian taxes. Additionally, capital gains are subject to tax in India. Consult a tax professional to understand implications.
  
  
• Currency fluctuations: Since investments are held in USD, changes in the INR-USD exchange rate affect returns. Monitoring currency trends can help you anticipate the impact on your portfolio.
  
  
• Choose the right platform: Brokerage fees for international accounts vary. Selecting a platform with low fees and reliable access to the US market is crucial to maximising returns.
  
  
• Regulatory compliance: The RBI’s LRS scheme limits foreign investments to $250,000 per year. Keep transactions within this limit and ensure all documentation is complete for compliance.

Conclusion

Investing in US stocks from India offers a powerful opportunity for portfolio diversification, providing access to global leaders and high-growth sectors beyond the Indian market. With a simple process to invest in US stocks from India and by understanding how to start day trading with US assets, investors can expand their portfolios, hedge against local market risks, and explore currency-based advantages. Combining US stocks with both long-term strategies and active trading can help Indian investors build a balanced and globally diversified portfolio, offering potential for growth and stability.