Tag: global stocks

Money Money Money: How to trade and invest in US stocks? Experts discuss

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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There are three main reasons why one may want to consider investing beyond Indian shores. First, there is the benefit of diversification- the option of being able to invest in some of the biggest and fastest-growing companies around the world. Second, a strong global currency ends up acting as a tailwind over longer periods of time. The US dollar for instance, has depreciated over 64 percent against the Indian rupee over the past decade. So, the value of your investment in USD increases that much more. Third possible reason – many a times global MNC giants listed in their home markets end up trading at a discount versus their Indian listed subsidiaries given the high valuations of the Indian market.

One can invest in global stocks either directly or via Indian mutual funds (MFs). Many asset management companies (AMCs) have set up fund of funds, which invest in markets all over the world- US equities being the biggest draw.

In fact, the quantum of money flowing into global fund of funds has more than quadrupled over the past one year from just under Rs 4,000 crore at the end of last June to nearly Rs 18,000 crore at the end of June 2021.

There is MF route and one can also buy and sell US stocks directly sitting here in India — thanks to several Indian brokers tying up with Stockal and Vested — two global digital investment players, which have the infra to connect a broker in the US with a broker here in India facilitating stock trading.

Stockal, in fact, puts it beautifully. They say, “We think of ourselves as a digital infra company building pipes from source markets where investors reside to destination markets where the investing products are.”

How it works

Indian brokers having tie-ups with these digital investment platforms let one set up a trading account. Then one can use the platform to buy up to $250,000 worth of US stocks a year as allowed under the Liberalised Remittance Scheme (LRS).

According to Indian law, Capital gains from these investments are taxed in India and also as per the US law, dividends on these US shares are taxed.

Stockal has a tie-up with several Indian brokers including IIFL Securities, HDFC Securities, Motilal Oswal, Scripbox and Geojit.

Vested meanwhile has a tie-up with Axis Direct, Angel Broking, Kuvera and 5Paisa.

But here’s the biggest twist in the tale! NSE has now announced its intent to allow trading in the US stocks via the International Finance Centre or Gift City in Gujarat. The biggest difference here will be that instead of trading the actual underlying share, NSE will facilitate trading in depository receipts or DRS of US stocks.

The exchange is also looking to allow fractional ownership of stocks meaning you don’t need to buy the full share for its whole price, but you can buy a part of it in smaller denominations. NSE plans to start with a fixed list of nearly 50 US stocks. It then will look to expand its offerings to include shares from other global markets as well.

Whether via MFs, or existing LRS enabled digital platforms or NSE’s soon to be launched Gift City foray, one thing is for sure – trading and investing in global stocks is sure to pick up in a big way in India coming months.

Gaurav Rastogi, founder and CEO of Kuvera.In; Radhika Gupta, MD and CEO of Edelweiss Asset Management; and Sitashwa Srivastava, co-CEO and co-founder of Stockal, discussed this further.

“It is good that the awareness of the international investing has risen so much. Any route is a good route but the awareness is fantastic. Opening up of this idea, opening up people’s minds to investing abroad is a very good thing. I also think that people are investing abroad for the right reasons. The reasons are structural, people are looking at diversification, currency. People are also understanding these markets because they understand the companies and the products,” said Gupta.

“We have seen this as a beginning of a long-term trend,” said Srivastava.

“It is a structural trend. People are realising and accepting the fact that investing abroad is an option they have outside of MFs,” Rastogi mentioned.

For the entire conversation, watch the accompanying video.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Global stocks finish at record highs, oil climbs for 5th week

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Wall Street notched broad gains on Friday, with the S&P 500 index closing at a record and global shares also finished at an all-time high, while oil prices rose for a fifth straight week.

Weaker-than-expected inflation data and news that US President Joe Biden has secured a bipartisan infrastructure agreement with lawmakers gave a boost to stocks. The plan is valued at $1.2 trillion over eight years, of which $579 billion in new spending.

The S&P 500 rose 2.7 percent for the week, its strongest weekly gain since early February as Nike and bank stocks rose, and weaker-than-expected inflation data eased worries about a sudden tapering in stimulus by the Federal Reserve.

The Dow Jones Industrial Average rose 0.71 percent to end at 34,438.58 points, while the S&P 500 gained 0.34 percent. The Nasdaq Composite dropped 0.06 percent after holding near the previous session’s record high.

MSCI’s gauge of stocks across the globe closed at a record high of 721.91.

The pan-European STOXX 600 rose 0.13 percent, ending the week with gains of 1 percent following sharp swings on concerns of higher inflation hitting real income and leading central banks to raise interest rates.

Britain’s FTSE 100 index was up 0.37 percent and Germany’s DAX edged up 0.12 percent.

The latest US personal consumption expenditures (PCE) data showed a measure of underlying inflation rose less than expected in May. Core PCE rose 3.4 percent year-over-year, above the Fed’s 2 percent flexible target.

“Economic data released this morning was mixed, but important readings in inflation were either in line with or slightly below expectations,” Paul Hickey of Bespoke Investment Group, LLC said in a note.

Views on the inflation outlook remained mixed.

“Today’s inflation data was another vote of confidence for the inflation is transitory camp,” said Edward Moya, a senior market analyst with OANDA.

US inflation will remain elevated for two to four years, and only a market crash will prevent central banks from tightening in the next six months, BofA top strategist Michael Hartnett said in a note.

A build-up of financial stability risks linked to a low-interest rate environment could lead to another downturn that interrupts the labour market recovery and impedes a return to maximum employment, Boston Federal Reserve Bank President Eric Rosengren said on Friday.

Yields for benchmark 10-year US Treasuries, jumped back above 1.50 percent to close out a week in which yields notched their largest gains since March.

Germany’s 10-year yield, the benchmark for the euro area, edged up to -0.156 percent.

Emerging market stocks rose 0.89 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan ended about 1 percent higher, while Japan’s Nikkei rose 0.66 percent.

Monetary and fiscal stimulus around the world in response to the COVID-19 pandemic is boosting financial assets, despite an uneven pace of recovery between regions, said Eddie Cheng, head of international multi-asset portfolio management at Wells Fargo Asset Management.

“Bonds go up, equity goes up, commodities go up – that is very much a liquidity-driven market,” Cheng said.

Sebastien Galy, a senior macro strategist at Nordea Asset Management, said the US infrastructure spending plan was “likely big enough for the economy without overheating it unnecessarily,” adding in a note that it meant “growth expectations improve somewhat.”

Oil prices rose for a fifth week after climbing to their highest since October 2018, on expectations demand growth will outstrip supply and OPEC+ will be cautious in returning more crude to the market from August.

Brent futures rose 62 cents, or 0.8 percent, to settle at $76.18 a barrel, while US West Texas Intermediate (WTI) crude rose 75 cents, or 1.0 percent, to $74.05.

The US dollar eased against a basket of other currencies, in choppy trading.

The Japanese yen strengthened 0.09 percent versus the greenback and the euro was up 0.07 percent.

Mexico’s peso extended gains after a surprise interest rate hike, while Latin American currencies were set to outpace their emerging market peers this week on hawkish central bank signals.

Sterling traded at $1.3885, down 0.27 percent on the day and on track for its worst month versus the dollar since September, after the Bank of England kept the size of its stimulus program unchanged and left its benchmark interest rate at an all-time low of 0.1 percent on Thursday.

Spot gold added 0.3 percent to $1,779.74 an ounce. US gold futures gained 0.61 percent to $1,776.60 an ounce.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Global Markets: Stocks set record highs as bond yields slide

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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European shares, the S&P 500 and an index of global stock performance scaled new peaks while yields on US, Japanese and European government debt fell on Friday as investors embraced the easy monetary policies of major central banks.

Investor sentiment rose in Europe after the European Central Bank raised its growth and inflation projections on Thursday, and also renewed a pledge to keep stimulus flowing.

The pan-regional STOXX Europe 600 index rose 0.7 percent to a record close, posting its sixth straight session of gains and best weekly performance at 1.1 percent since early May.

The MSCI all-country world equity index, a benchmark that tracks shares in 50 countries, set a new intraday high and record close at 719.52, up 0.2 percent in a late-day surge that also lifted the S&P 500 to an all-time close.

Stocks on Wall Street seesawed most of the session near breakeven as investors bought tech stocks after shrugging off data on Thursday that showed year-on-year inflation spiked to 5.0 percent in May, a jump the Federal Reserve has said is transient.

Declining Treasury yields have confounded investors who see signs of inflation being more persistent than the Fed’s view that sharply rising consumer prices will be short-lived.

“You’ve seen an increasing comfort level with the Fed’s stance that inflation is going to be transitory, and as that sinks in, you continue to see large buyers of bonds, which is keeping yields from rising,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

Inflation data has alarmed many investors, but for the moment the reaction is stocks are still preferable to bonds in an inflationary environment, said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

“There is a concern that eventually you could get some migration out of stocks into bonds,” Meckler added. “But right now we seem to be at that pre-tipping point where bonds don’t yield enough to scare people out of stocks.”

The Dow Jones Industrial Average rose 0.04 percent, the S&P 500 gained 0.19 percent and the Nasdaq Composite added 0.35 percent.

US growth-oriented stocks slightly outpaced value stocks as the two styles vied for leadership: big tech stocks added the most upside followed by financial shares.

Jack Ablin, chief investment officer at Cresset Capital Management, said he is concerned about the long-term outlook for equities because of stretched valuations once interest rates start to rise, perhaps starting in late in 2022.

“Value-oriented cyclical companies with good quality balance sheet are probably the best deal in this kind of market,” Ablin said.

Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.3 percent.

Yields on 10-year US Treasury notes slid 0.5 basis points to 1.4535 percent after earlier declines that positioned the benchmark for its biggest weekly decline in a year.

Euro area bond yields followed Treasuries. Benchmark German 10-year bonds fell 3 basis points to -0.28 percent and were set for their best week of the year. Yields move inversely with prices.

Falling expectations that higher inflation could lead to early Fed tightening prompted a flattening of the US yield curve, with the spread between the 10-year and 2-year yield at its narrowest since late February on Friday.

Yields will likely move higher again as economies reopen from COVID-19 pandemic lockdowns.

“We still think consumers are going to help prices higher, when these economies reopen properly, that people can start traveling again, spending again,” said Jeremy Gatto, investment manager at Unigestion. “We are going to get a further boost from the consumption side, and we therefore expect bond yields to move higher.”

The euro and sterling dipped against the dollar as investors bet interest rates would stay lower for longer in Europe.

The dollar index rose 0.49 percent, with the euro down 0.51 percent to $1.2107. The Japanese yen weakened 0.31 percent versus the greenback at 109.66 per dollar.

Oil prices rose to multi-year highs, heading for a third straight week of gains on the improved outlook for worldwide demand as rising vaccination rates lead to a lifting of pandemic curbs.

Brent crude futures rose 17 cents to settle at $72.69 a barrel. US crude futures settled up 62 cents at $70.91 a barrel.

US gold futures settled 0.9 percent lower at $1,879.6 an ounce.

Also Read: Top US regulators pledge to seek reforms for money markets

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Global equities nearly grasp all-time record, dollar drops after US jobs data

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Global stocks rallied on Friday and closed near all-time highs, and oil and gold rose while the dollar dropped after US jobs data was strong but not as robust as expected, easing investor worries that the Federal Reserve would soon rein in monetary stimulus.

US employers increased hiring in May and raised wages. But the nonfarm payrolls increase of 559,000 jobs landed below the 650,000 forecast of economists polled by Reuters.

The pan-European STOXX 600 index rose 0.39 percent after hitting a record high this week. MSCI’s all-country world index, which tracks shares in 50 countries across the globe, gained 0.71 percent.

A stronger-than-expected jobs report would have heightened worries that the Fed might contemplate paring back its bond-buying program and raising interest rates.

“This lower payrolls number should keep investor concerns about inflation muted – as long as the job market remains depressed, it’s hard to see wage inflation jumping higher,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

Zaccarelli added that there may be some lingering concerns about overall price inflation as the Fed keeps rates lower for longer amid unprecedented fiscal stimulus.

Market whispers had been for a stronger number, analysts said. US Labor Secretary Marty Walsh in an interview with CNBC welcomed a “good, solid” jobs report and predicted more Americans would get back to work in coming months as more are vaccinated.

On Wall Street, Microsoft lifted the S&P 500, followed by Apple, as the index gained 37.04 points, or 0.88 percent, to 4,229.89, marking an overall near-record jump of more than 12 percent this year. Those technology firms account for more than 5 percent of the MSCI’s all-country index’s weight.

Shares for Amazon.com Inc, Facebook, Alphabet’s Google and Tesla also were up.

The Dow Jones Industrial Average rose 0.52 percent, and the Nasdaq Composite added 1.5 percent.

So-called “meme stocks” continued their wild ride, with AMC Entertainment Holdings shares little changed but on track to nearly double for the week.

Analysts said investors were watching the progress for proposed US infrastructure spending. President Joe Biden rejected a new proposal from Republican Senator Shelley Moore Capito, the White House said. They were scheduled to meet on Monday.

Benchmark 10-year notes last rose 20/32 in price to yield 1.5585 percent, from 1.627 percent, while euro zone bond yields edged lower as investors wondered about Fed policy.

Oil rose, with Brent topping $72 a barrel for the first time since 2019 on as OPEC+ supply discipline and recovering demand.

The dollar index fell 0.39 percent, with the euro up 0.36 percent to $1.2168. Strategists in a Reuters poll were almost evenly split on the dollar’s near-term direction.

New orders for US-made goods fell more than expected in April as a global semiconductor shortage weighed on production of motor vehicles and electrical equipment, appliances and components.

Taper talk

Investors have been parsing economic data to gauge whether inflation could force the Fed to change course.

“Will prolonged, low-wage inflation allow for a longer period of low, overall price inflation to reign? Or will a Fed that is slow to raise rates – because they are concerned about a weak labor market – create a higher-than-expected overall inflation regime?” said Independent Advisor Alliance’s Zaccarelli.

Spot gold added 1.1 percent to $1,890.65 an ounce after a 2 percent tumble on Thursday, its biggest since February.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Global markets flattened by snowballing correction

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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World stocks were spiralling towards their worst week of the year on Thursday, as a bigger-than-expected rise in US inflation worried bond markets and as red-hot metals, crop and cryptocurrency prices all suffered sudden stops.

For traders the only place to take refuge was the US dollar.

Asia had taken a post-Wall Street pounding, London’s FTSE was down 2 percent before lunch, bond, commodity and US futures markets were all deep red and Elon Musk and Tesla were no longer accepting bitcoin.

While there were plenty of idiosyncrasies, the overarching worry was rising inflation pressures in the United States might force the Federal Reserve to start turning off its cheap money that has been driving markets rapidly higher.

Basic resources and oil and gas sectors, among the recent top gainers on the back of a surge in commodity prices, fell over 2 percent as oil prices slumped nearly 2.5 percent in their worst day in six weeks.

“Inflation pressures are going to be rising, and they’re not going to be temporary,” said Jeremy Gatto, investment manager at Unigestion. “What does that mean? Effectively that (interest) rates will be rising.”

The MSCI world equity index, which includes 50 countries, fell 0.6 percent and was on course for its fourth straight day of losses and weekly fall of nearly 4 percent, which would be its worst since last October.

Wall Street futures were 0.4 percent down after being blindsided on Wednesday when data showed US consumer prices jumped by the most in nearly 12 years in April. It showed booming demand amid a reopening economy meeting equally powerful supply constraints both in the US and abroad.

The jump, which sparked the S&P 500’s worst one-day drop since February, was largely due to outsized increases in airfares, used cars and lodging costs, all driven by the pandemic and likely to prove transitory.

Fed officials were quick to play down the impact of one month’s numbers, with vice-chair Richard Clarida saying stimulus would still be needed for “some time” but traders weren’t wholly convinced.

Yields on 10-year Treasuries were at 1.68 percent, having climbed 7 basis points overnight in the biggest daily rise in two months. Germany’s sub-zero 10-year yield, which is Europe’s benchmark, was its closest to the positive territory since May 2019.

“The big question today is not by how much inflation is going to spike, but for how long inflation is going to spike,” said Hugh Gimber, a global market strategist at JPMorgan Asset Management.

“As to the (global market) slide today, I think really it’s highlighting how uncomfortable investors are in assessing the new mandates for the Fed. They still don’t fully understand when the Fed would move.”

‘Big battle’

Nasdaq futures were flat, losing earlier slim gains, while S&P 500 futures turned slightly negative.

As major economies reopen more fully from COVID-19 lockdowns, many investors expect higher levels of inflation to stoke volatility in equities markets through the year.

“This year is going to be a big battle between the bullishness of mass reopening/stimulus on one hand and the inflationary consequences on the other,” Deutsche Bank analysts wrote. “Expect regular pockets of vol.”

Investors have now priced in a roughly 80 percent chance of a Fed rate hike as early as December next year, though it has provided a shot in the arm for the dollar which is under pressure from rapidly expanding US budget and trade deficits.

Against a basket of major peers, the dollar crawled up to 90.759 and away from Wednesday’s 10-week trough of 89.979.

For the cryptonites, there was a chink of light as bitcoin steadied at $50,830 after a 13 percent drop when Elon Musk had said Tesla would stop accepting it as payment because of the amount of fossil fuels that go into bitcoin ‘mining’.

Bitcoin is created when high-powered computers compete against other machines to solve complex mathematical puzzles. At current rates, the process is estimated to devour about the same amount of energy annually as the Netherlands did in 2019.

Ether, the world’s second-largest cryptocurrency, couldn’t match bitcoin though, dropping 2.3 percent to $3,735. Metals and crops were also wilting. Copper dropped 1.6 percent having hit a record high earlier in the week while corn, wheat, sugar dropped between 1-2 percent.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Inflation fears stalk stocks

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

A sell-off in global shares extended to its longest losing streak in two months on Wednesday as surging commodity prices and growing inflationary pressure in the United States prompted bets on earlier interest rate hikes and higher bond yields.

A limited equity market recovery emerged in European early trade, with the continent’s shares STOXX 600 index adding 0.4 percent after Tuesday’s slump.

London’s FTSE 100 led the way, buoyed by data showing Britain’s pandemic-battered economy grew more strongly than expected in March.

MSCI’s broadest index of Asia-Pacific shares outside Japan slumped 0.9 percent, having earlier touched its lowest since March 26.

After hitting fresh record highs earlier in the week, MSCI’s gauge of stocks across the globe was 0.2 percent down, its third consecutive day of losses, the longest-running streak since March 4.

Investor focus was locked on the US consumer price index report to be released by the US Labor Department at 1230 GMT, with analysts expecting a 3.6 percent lift in year-on-year prices, boosted by last April’s low base.

US Treasury yields remained stuck in a tight range. The yield on benchmark 10-year Treasuries drifted lower to 1.6130 percent, below the recent peaks of late March levels and far from the 1.9 percent level at the start of 2020 before the coronavirus pandemic.

Euro zone bond yields held below recent highs touched on Tuesday. Germany’s 10-year yield was down 1 basis point to -0.17 percent, after rising to the highest since March 2020 at -0.152 percent on Tuesday.

Analysts said a combination of inflation fears and some investors cutting their exposure to overstretched stocks or sectors was behind the recent downturn.

“It’s a battle of two narratives: one of reflation and roaring 20s, with fiscal stimulus creating higher levels of growth; and the other is the lower-for-longer idea where ultimately inflation proves hard to generate and interest rates stay at low levels,” Kiran Ganesh, head of multi-asset at UBS Global Wealth Management in London.

“These two narratives are conflicting and are in investors’ minds at the same time.”

Japan’s Nikkei reversed early gains to shed 1.9 percent, while Taiwan’s benchmark index plunged 6 percent from all-time highs to levels seen in February on fears it may raise its COVID-19 alert level in coming days, which would lead to closure of shops dealing in non-essential items as infections rise.

E-mini futures for the S&P 500 stumbled 0.2 percent while futures for the tech-heavy Nasdaq were down 0.5 percent.

Analysts, however, doubted the broader equities sell-off would extend much further in a world of easy accommodative policy and fiscal largesse.

“Despite the severity of the moves, we sensed limited panic in our client conversations with many using (the) weakness as an opportunity to buy the dip, particularly in the value-orientated areas e.g. banks, energy and insurance,” JPMorgan analysts wrote in a note.

The equity rout barely helped drive any safe-haven flows into the greenback even as futures pointed to another negative open for Wall Street.

“What is unusual about the last two days is that the equity-market angst did not provide the US dollar with a notable lift,” said Alvin T. Tan, head of Asia FX strategy at RBC Capital Markets.

The dollar hovered near a 2-1/2-month low versus major peers, as traders clung on to bets that the Federal Reserve would remain steadfast in its easy policy settings ahead of the release of the US consumer price index data expected to show a sharp rise in annual US inflation.

The US Federal Reserve expects higher inflation though officials have pointed to transient factors and base effects for the temporary rise.

The dollar index, which measures the greenback against six major currencies, was broadly flat at 90.211.

The currencies of major natural resource suppliers such as Canada have been buoyant amid rising commodity prices.

The loonie was not far from a 3-1/2-year high of C$1.2078.

The Australian dollar, another proxy for commodity prices, pulled away from a 10-week high struck on Monday to reach $0.7811.

Oil prices were higher, with US crude adding 1 percent to $65.94 a barrel. Brent crude added 0.9 percent to $69.20 per barrel.

Copper prices rose and were not far from a record high hit earlier this week, with three-month copper on the London Metal Exchange adding 1.1 percent to $10,579 a tonne.

Spot gold was 0.2 percent lower at $1,832 an ounce.

In cryptocurrencies, ether hit a fresh record high touched on Monday and was last at $4,315.41. The value of the second-biggest digital token has surged over 5.5 times so far this year.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Investing in global stocks? Know charges and tax implications

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Investing in global stocks not only gives individuals diversification but also allows them to participate in the growth story of the stocks. One can easily invest in global stocks all from the comfort of home or office.

Here’s a look at different aspects of investing in global stocks from India:

What should investors consider before investing in global stocks?

According to Viraj Nanda, CEO at Globalise, apart from portfolio planning, time horizon, and asset allocation perspective, investors should focus on fundamental analysis of stocks they may be considering.

“This would include knowing the industry, competitive positioning of the company, its profitability trajectory, the strength of the balance sheet, and quality of management. This would require comprehensive due diligence on part of the investors,” Nanda suggests.

Also read: Here are key tips to quickly grow your savings

An alternative way to build a global exposure would be through the Exchange-Traded Fund (ETF) route. There are a variety of ETFs available which provide an easy route for investors to build exposure to different geographies, sectors, and asset classes.

How is this type of investment taxed?

Capital gains tax applies to any profits made on sales of investments. However, as Nanda explains, for Indian investors buying stocks or ETFs listed in the US stocks, there is no capital gains tax levied in the US.

“The investor is only liable to pay capital gains tax in India, where long-term capital gains tax applies to any profits from the sale of assets held for more than 24 months. If the investors held the investment for less than 24 months, they will have to pay short-term capital gains tax,” Nanda elaborates.

Interest income and dividend income are taxed at the normal rate of tax.

“There is a 25 percent TDS on the dividend earnings. This TDS can be claimed as a credit against the income when filing taxes in India. Due to the Double Taxation Avoidance Agreement (DTAA) between the US and India, you will not be taxed twice on the same income,” Nanda further tells.

What kind of charges are associated with this kind of investment?

The charges could include account opening fees, brokerage expenses, and annual subscription costs as per pricing plans that investors may subscribe to.
Besides that, Nanda says, banks in India might charge fees for transferring money from India into the US brokerage account. There may be fees that overseas broking partners may charge for extra services, such as international wire transfer and paper confirmations that investors should be aware of.

Also read: Key investment mistakes to avoid during COVID-19 second wave

Is it the right time to invest in global stocks?

According to Nanda, investors should allocate to equities strategically based on their financial goals and risk appetite, with a long-term wealth creation perspective.

In that regard, investing in any equity markets warrants a disciplined, long-term approach and one should not look to time the market at all. Instead of looking for entry points in the market, one should focus on portfolio planning to arrive at a meaningful allocation to global equities. Depending upon individual financial goals, our research shows that global equity allocation of 20-50 percent of the overall equity portfolio enables diversification and risk/return optimisation benefits.

Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow