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Senin, 07 Juni 2010

How to buy stocks in USA, China or overseas from India?

Indian Investors looking to invest in stock markets abroad

Have you been looking for investing opportunities beyond the Indian Stock markets (NSE, BSE)? For e.g. investing in Oil ETFs, or other mutual funds exclusively available in select developed countries like United States or Europe, UK, etc? Or thinking of buying stocks in China? Read on.. the answer to these questions is much simpler than what one would have imagined.

RBI allows $25000 foreign investment per annum

RBI has several restrictions on buying and selling rupee. For example, you are still not allowed to trade forex in india, unless it is for hedging purpose. However, fortunately, RBI has allowed every indian to invest up to $25000 overseas. This means you can use this much money to either buy real estate, stocks, mutual funds, or simply put that money in a savings account in USA, China or any other country (this last option does not make economical sense, because interest rates in India are higher). Thus trading in stocks in world markets either in USA, Japan, China, Europe, or any other country is now extremely Easy. All you do is start by registering with an online broker who allows you to trade in world markets of your choice.

Registering with an Online broker

An example of such an online broker is Interactive Brokers. This is just one example. There are several other online brokers which allow you to trade in world wide markets from India. Even ICICI Direct allows you to invest in stocks in USA or other countries. Google a little or keep your eye on advertisements. Good brokers usually advertise aggressively highlighting their plus points. The following things need to be kept in mind.
  1. Trading in world markets may require a larger appetite. For example when you open an account with Interactive brokers, you have to start with $5000 for investing in world markets like NYSE.
  2. There is a verification procedure when you open your account where you may have to submit/post some documents. The overall approval procedure may take a couple of days or more.
  3. The money you invest in foreign stocks is kept in dollars (or other currency). Thus apart from stock market fluctuations you are also exposed to the risk of currency fluctuations.

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