How to Invest in Foreign Stocks from India

how-to-invest-in-foreign-stocks-from-india

Google, Microsoft, Facebook, Twitter, Amazon, Flipkart, Samsung, Apple…These are a few reputed companies. Have you ever wondered if you can own a part of these well-known companies? Despite these companies not being a part of the Indian stock exchanges, you can still invest in these foreign exchange markets. However, before knowing how to invest in these markets, there are a few stock tips that you should consider. Following are some pointers you should keep in mind before investing in the foreign share market:

  1. According to the Reserve Bank of India (RBI), an individual Indian citizen is allowed to remit $250,000 per financial year.
  2. You’ll have to pay charges and brokerages in the currencies of the foreign exchange company’s country. Depending on the country, these charges could be high.
  3. Your investment might hamper due to the fluctuating currency exchange rate profits.

Advantages of investing in the foreign stock market:

Diversified portfolio

Investing in the foreign stock market is quite helpful when the domestic economy is underperforming. In such scenarios, a market in the other part of the world might be doing well. This might help you to offset the weak performance of your domestic stock market.

Depreciating currency

If your domestic currency is depreciating relative to the foreign currency you invested in, you’ll still benefit in the falling market. This is quite common for investors investing in the US stock market, as they bore the advantage of a depreciating Rupee.

Unbelievable returns

Sure, investing in the foreign stock market comes with relatively higher risk, but so is the profits. Foreign stock market has the potential of earning extraordinary returns, thanks to growing global markets.

How to invest in the foreign share market?

If you have already made up your mind to invest in the foreign share market, follow these easy steps to help you build your overseas portfolio:

  1. Open a trading account
  2. Transfer Funds
  3. Open DEMAT account

Let us understand these pointers, in brief, to help you invest in foreign share market.

Open a trading account

If you want to invest in the foreign companies listed in the foreign stock exchange, you need a have a trading account with an Indian broking house. Your Indian broking house acts as an intermediary and executes the trades for you. The broking house will further help you with the Knowing Your Clients (KYC) documents of the foreign country.

Transfer Funds

After submitting your KYC documents, you need to submit a duly filled separate account opening form. You’ll also need to sign a Foreign Exchange Management Act (FEMA) declaration form. Once your account if functional, and you have transferred the funds, you get access to your foreign brokerage account. Your Indian broker will have no involvement in any of your foreign exchange trading’s transactions.

Open DEMAT account

When you buy shares, it gets transferred in your account after T+2 days.

Investing in foreign markets helps you to invest in your desired company without any boundaries. In this era of internet, it is not that difficult to invest in foreign markets. Finding and choosing the right Indian Broking house can ease your work to significant limits.

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