1. What is NSE exchange in IFSC?
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The NSE is the National Stock Exchange that serves as a portal to facilitate sophisticated trading in the electronic market.
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Investing in stocks beyond the boundaries of India is a great way to diversify the portfolio and when one thinks about a wide investment pool, US stocks come into mind. Did you know that, unlike earlier where investing in US stocks could be done either through equities or international mutual funds only, now you can invest in US stocks through the NSE IFSC Exchange?
In this article, we will discuss in detail the NSE IFSC Exchange and how you can invest in US stocks through it.
Before we move ahead with the ways of investing in US stocks through the NSE IFSC, let’s first understand what the NSE IFSC Exchange is.
The NSE IFSC (International Financial Service Centre) is a subsidiary of the NSE (National Stock Exchange) enabling investors to trade in the international market. Initially, the subsidiary was established to help NRIs and foreign investors trade in the Indian market and now Indian investors are also using the portal to invest in US stocks.
Let’s take a look at the key features of the NSE IFSC Exchange portal:
It serves as the core portal where trade and investment related to all kinds of international stocks, securities and assets are conducted.
Investments are done in US dollars.
Any investments done outside India are done under the LRS i.e. Liberalised Remittance Scheme.
Investment in US stocks can be done within a limit of US $2.5 lakhs only in one financial year, as per LRS rules.
Did you Know?
The NSE IFSC operates out of the Gift ( Gujarat International Finance Tech) City in Gandhinagar, Gujarat and has been in operation since March 2022.
The announcement of introducing the NSE IFSC Exchange to allow and streamline foreign investments created several new opportunities for investors.
Let’s take a look at how the portal can benefit investors:
Access to International Market
Earlier international investments were allowed only through equities or international mutual funds but the portal has provided access to the international market for diverse portfolios and expanded profit margin
Raising Capital
The introduction of this portal has particularly helped startups raise foreign capital and make investments in their growth and development in the Indian market.
Tax Exemptions
As an investor, you must know that capital gains made through the transfer of equities shares of companies listed on the IFSC are exempted from tax liabilities.
Foreign Investors
Foreign investors can benefit by investing in the growth of Indian companies in exchange for high returns. Additionally, security is promised since the investments are done in US $.
Now that you have understood all about the NSE IFSC Exchange, let’s get ahead with the process of investing in US dollars:
Step 1:Open a Trading Account
The first step to making investments in the stock market is to open a trading account and a demat account. However, to invest in US stocks, you have to open these accounts with a NSE IFSC-registered broker. If your existing broker is already registered you can reach out to understand the formalities.
Note- An updated list of registered brokers is available on the official website of NSE IFSC Exchange.
Step 2: Fund Your Account
The next step is funding your trading account. Transfer the money from your Indian account to an NSE IFSC-registered account.
Now, remember that investing in US stocks is allowed only through US $ making it important for you to do a currency conversion. Once this is done, you are set to invest in US stocks.
Step 3: Research US Stocks
As an investor, it is crucial to perform due diligence before putting your money in. You can do so by gauging the US stock market, international trends, charts and patterns. Additionally, staying on top of the latest news and events can help you get a better idea about the market.
Step 4: Place an Order
Once you have decided on the US stock you want to invest in, placing an order is a simple task. Select the stock, make the payment and the stock will start reflecting on your demat account.
Step 5: Monitor and Manage Your Investments
Remember that as an investor your job does not get finished at placing an order. To expand your profit margins you must leverage market trends by monitoring and managing your investments. You can rely on news and customised suggestions provided by your trading portal.
Investing in US stocks through the NSE IFSC Exchange comes with certain risks that you must be mindful of like:
You do not get to buy actual US stocks but rather depository receipts.
Investing in US stocks comes with multiple costs like NSE IFSC transaction fees, demat and trading account charges, currency conversion charges and taxation on gains.
The introduction of the NSE IFSC Exchange has helped investors in multiple ways. However, it is crucial to perform due diligence, gauge NSE stock price and be informed about all the updated costs of investing in US stocks to avoid making emotional decisions.
Once you have got a hold of the movements in the international market, you are ready to expand your profit margin and leverage a wide investment pool.
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.
This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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The NSE is the National Stock Exchange that serves as a portal to facilitate sophisticated trading in the electronic market.
There are several known and credible brokers listed with NSE IFSC like Anand Rathi, Emkay, HDFC, Motilal Oswal, Bajaj Trading and many more.
To trade in NSE IFSC you need to first open a trading account and demat account with a NSE IFSC listed broker. Once you have an account you need to convert your Indian rupees into US $ to start trading.
When you make investments in foreign stocks through NSE IFSC exchange, you are provided with receipts (depository receipts) to showcase your ownership on the underlying stock.
NSE IFSC exchange was introduced to enable investments in international markets including US stocks. Investment in US stocks can be done through a NSE IFSC registered trading account that provides the investor depository receipts showcasing their investment in US stocks.
Any person with a Demat Account and Trading Account with a NSE IFSC registered broker can invest in US stocks through the NSE IFSC exchange.
Investing in US stocks via NSE IFSC exchange allows access to a wide investment pool, no risk of brokers, transaction security and exemptions from unnecessary taxes like security transaction tax, dividend distribution tax etc.
To invest in US stocks through the NSE IFSC exchange, you need to convert your currency to US $ and get approval from a NSE IFSC registered broker.
Select a NSE IFSC registered broker of your choice and make a request to open an account like your regular trading and demat account. If your existing broker is already a registered broker then you can reach out to know the further formalities.
NSE IFSC Exchange allows you to invest in US Stocks like Google, Apple, Amazon, Walmart, Tesla and many more.
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