In an interview with ETMarkets, Kashyap said, “When Indians invest in FMCG brands like Google, Apple, Microsoft, Meta and Amazon, they not only take advantage of the growth of these giants, but also benefit from a strong dollar. You can also receive it.” excerpt:
What factors should Indian investors consider before diversifying their portfolio into US stocks in 2025?
Indian investors should consider exchange rates before diversifying into the US market as fluctuations can affect returns. It is also important to assess market conditions, economic growth prospects, and the regulatory environment.
The US market also provides diversification opportunities, providing access to sectors and regions that are poorly represented in the Indian market.
Balancing investments in both the US and Indian markets allows investors to make portfolio allocations keeping in mind their investment horizon and risk tolerance. Additionally, the appreciation of the dollar can further increase your earnings, potentially increasing your earnings over time.
Understanding these factors can help you manage risk and make more informed investment decisions. What is the best way for Indian investors to access the US market? Direct stock purchases, ETFs, or mutual funds.
There are two main avenues for Indian investors seeking exposure to the US market: the direct route and the indirect route.
Through the direct route using platforms such as INDmoney, investors can open an account with a US-based broker and buy US stocks and ETFs directly.
This process is facilitated under the Reserve Bank of India’s Liberalized Remittance Scheme (LRS), which allows remittances of up to $250,000 per year per individual.
The route is gaining in popularity, with Indians investing around $6 billion in the U.S. market, including more than $1 billion transferred last year alone.
Alternatively, for the indirect route, investors can opt for Indian mutual funds or ETFs that allocate assets to global markets, including the US.
These funds allow Indian investors to diversify without dealing with the complexities of direct investing, making them an easy and efficient way to enter the US stock market. These investments total more than $10 billion.
Both routes have their own advantages. Direct investing allows for greater control and access to a wider range of securities, while indirect investing simplifies and facilitates management.
Investors should evaluate their financial objectives, risk tolerance, and operational preferences to determine the best approach to accessing the U.S. market.
In total, it is estimated that over 4 million Indian investors have exposure to the US market through these channels.
With the rupee at record lows, how will currency fluctuations impact the returns of Indians investing in US stocks and how can they hedge this risk?
Investing in US stocks is beneficial for Indian investors, but it is essential to take currency fluctuations into account. If the rupee depreciates against the U.S. dollar, investments in the U.S. may become more valuable in rupee terms, resulting in increased returns.
When Indians invest in FMCG brands like Google, Apple, Microsoft, Meta and Amazon, they not only tap into the growth of these giants but also benefit from a strong dollar.
We recommend that you constantly evaluate your risk tolerance and investment objectives to determine whether hedging is in line with your strategy.
Which sectors or regions globally are currently attractive for Indian investors looking to diversify?
Indian investors are increasingly looking to diversify their portfolios by exploring high-growth sectors and regions beyond the domestic market.
Sectors such as AI, electric vehicles, semiconductors, and renewable energy are particularly attractive due to their rapid global expansion and potential for innovation.
Experience cutting-edge advances and market leadership by investing in established technology giants, often referred to as the Magnificent 7, such as Meta, Apple, Amazon, Netflix, and Google, as well as emerging giants such as Nvidia and Tesla. You can.
These companies are at the forefront of technological innovation, making them attractive options for diversification.
If an NRI plans to settle down in India after 60 years, how should he create a retirement fund? How big should the corpus be?
NRIs planning to retire in India can benefit from favorable exchange rates and grow their wealth when converting overseas earnings into rupees.
Since this is for retirement, your asset allocation should ideally be biased toward relatively safe vehicles such as mutual funds, ETFs, term deposits, and debt instruments.
The size of your retirement corpus depends on factors such as lifestyle, inflation, and medical needs. As a general rule of thumb, to ensure a financially secure retirement, you should aim for a corpus that is at least 25-30 times your annual expenses.
What are the main investment options available to NRIs in India? Real estate, mutual funds, stocks, fixed deposits, etc.?
India’s fast-growing economy offers a variety of promising investment opportunities for NRIs. As more investors move from savings to stocks directly, NRIs will be able to tap into India’s strong growth potential through the stock market.
Mutual funds and ETFs provide diversification across different sectors and asset classes and cater to different risk profiles. Fixed deposits (FDs) and government-backed securities offer stability and predictable returns, making them attractive to conservative investors. Real estate remains a long-term investment diversification vehicle.
Additionally, there will be a surge in initial public offerings (IPOs) in 2024, raising around Rs 1.8 trillion, creating opportunities to invest in startups from the outset.
What are the most promising sectors in India for long-term investment for NRIs?
The electric vehicle (EV) industry is gaining momentum in India, and the government’s EV30@30 initiative aims to make 30% of new car sales electric by 2030, making India a global leader in EVs. It is positioned.
The renewable energy sector, particularly solar and wind, is in line with global sustainability trends, making it a very attractive area for investment.
Artificial intelligence is driving innovation and creating significant growth opportunities across industries such as healthcare, finance, and manufacturing. Government support and a burgeoning technology ecosystem make AI an attractive investment area.
How can NRIs balance their investments between Indian and global markets to optimize returns?
While the Indian market has high growth potential, global markets like the US offer exposure to developed economies, combining wealth creation and risk diversification opportunities.
We offer both avenues at INDmoney, allowing investors to take advantage of growth opportunities in both the Indian and US markets.
We are democratizing access to comprehensive investment tools for Indian investors to build well-diversified growth portfolios.
How can an NRI effectively manage his investments in India using an NRE or NRO account?
NRIs can manage their investments in India through NRE (Non-Resident External) and NRO (Non-Resident Ordinary) accounts.
While NRE accounts offer tax-free interest and repatriation benefits of up to $1 million per financial year, NRO accounts are for managing income earned in India.
INDmoney supports NRO accounts, making it easy for NRIs to invest in the Indian stock market and mutual funds.
(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not represent the views of Economic Times)
