How to invest in NASDAQ from India?

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How to invest in NASDAQ from India?
  • If you wish to consider investing in US shares like Facebook, Google, and Apple, it is very difficult to do so from India.
  • However, it is super easy to own shares of these companies now, and that too, from India.

What is NASDAQ?

  • NASDAQ is an American stock exchange that is designed to enable investors to buy and sell stocks speedily as well as transparently.
  • NASDAQ stands for the National Association of Securities Dealers Automated Quotations.
  • The index was opened on February 8, 1971.
  • More than 3300 companies are listed on the NASDAQ exchange these days.
  • It is also the second-largest stock exchange in the world in terms of traded securities.
  • There are different sectors of companies that are listed on the exchange, like capital goods, energy, finance, consumer durables, etc.

How to invest in the NASDAQ stocks from India?

It is possible to invest in NASDAQ stocks from India.

There are two ways to do so, which are as follows:

How to invest in the NASDAQ stocks from India

#1. Direct Investments:

  • You can invest in NASDAQ stocks directly via the IND Money application.
  • This zero-cost structure allows users to start trading without any sort of account opening fees or commission on buying and selling securities.
  • It will take only 3 minutes to open a US stock account with IND money.
  • If you feel that US stocks are expensive, you can thereby take advantage of fractional trading and start your US investment journey for as little as $1.
  • Apart from this, you can directly invest in stocks via two methods.

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They are as follows:

Direct Investments in NASDAQ stocks
Opening an overseas trading account with a domestic broker:
  • There are many stock brokers that have got tie-ups with the stockbrokers in the US.
  • They will act as your intermediaries and will henceforth execute your trades.
  • You can simply open an overseas trading account with any such broker, and for that, you will have to submit a few sets of documents.
  • There are also some restrictions after availing of this facility.

They are as follows:

  • Based on the brokerage firm, you will have some restrictions on certain investments or the number of trades that you can make. The cost of investing can also be high, considering the brokerage as well as the currency conversion charges.
Opening an overseas trading account with a foreign broker:
  • You can easily open an overseas trading account with a foreign broker with a presence in India.
  • Some of the main brokers here are Charles Schwab, Ameritrade, Interactive Brokers, etc.
  • For this, you will have to simply check the fees and charges before opening an account.

#2. Indirect Investments:

Using the indirect method, there are two possible ways to invest in NASDAQ.

They are as follows:

Indirect Investments
1. Mutual Funds:
  • Here, there will be no need to open an overseas trading account or to maintain a minimum deposit, as is the case with many of the stockbrokers that are offering direct international investment.
  • Hence, there are many mutual funds that invest in the US stock market.
2. Exchange Traded Funds (ETFs):
  • ETFs will also help you gain exposure in the US stock market.
  • There are direct as well as indirect routes that are easily available for ETFs.
  • You can simply purchase the US ETFs directly through a domestic or international broker, or you can simply purchase an Indian ETF or international index.
3. Investing via New-Age Applications:
  • After the evolution of mobile applications for all the different types of services, there are also other apps that are launched by start-ups so as to help Indian investors invest in the US stock market.
  • Some of these applications may not allow intraday trading in the US market due to some of the regulatory requirements.

How to invest in NASDAQ from India via ETFs?

  • ETFs are considered to be the cheapest way to invest in NASDAQ stocks.
  • An ETF is basically a collection of many stocks that are traded under a fund.
  • They are very much like mutual funds.
  • The main difference is that they are passive funds—the underlying stocks will track the index.
  • You can trade on NASDAQ from India after buying ETFs that are available in India.
  • The major ETFs are ICICI Prudential NASDAQ 100 index fund and Motilal Oswal NASDAQ 100 ETF.

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How much can you invest in US stocks?

The Reserve Bank of India (RBI) has released the guidelines under the Liberalized Revenue Scheme (LRS) which permit an Indian resident to invest up to $250,000 (around 1.9 crore rupees) per year without any permission.

What are the different charges that are involved while investing in NASDAQ stocks?

There are many charges that are involved while investing in NASDAQ stocks.

The following are the main charges:

1. Tax Collected at Source (TCS):

  • A minimum of 5% TCS will be levied on all the remittances that are above RS. 7 lakhs under the RBI’s LRS scheme.
  • This will be applicable to the amount above RS. 7 lakh but not the total amount.
  • This TCS can be claimed as a refund when the taxpayer files his own Income Tax Return.

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2. Capital Gains & Dividend Tax:

  • In the US, dividends are taxed at the rate of 25% for Indian citizens.
  • Due to the Double Tax Avoidance Agreement (DTAA), the investor here can claim credit for the taxes that are paid abroad, so that he/she will not have to pay tax on the same income twice.
  • There is no sort of capital gain tax on your investments in the US.
  • But you will have to pay tax on the capital gains in India.

3. Bank Charges:

  • Most banks will be charging foreign exchange conversion fees as well as transfer fees.
  • There are also high chances of having a one-time account setup charge.

4. Brokerage Fees:

Brokers will charge brokerage fees on the buying as well as selling of shares.

5. Foreign Exchange Rate:

The foreign exchange rate at the time of purchase or withdrawal will impact the costs as well as the number of units allotted.

Main reasons to invest in NASDAQ from India:

The following are the main reasons:

  • The NASDAQ index is much less volatile than the Indian stock market index. Major global corporations are headquartered in the US, which will offer you a more diversified investment avenue. In pure dollar terms, NASDAQ has totally outperformed the Indian stock market over the last decade.

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The above blog will give you an idea of how to invest in NASDAQ from India.

Frequently Asked Questions (FAQs)

Answer: You can simply invest in NASDAQ by directly buying stocks through mutual funds or ETFs.
Answer: Yes, you can do so through mutual funds or ETFs.
Answer: Yes, you can do so by opening an account with a foreign as well as a domestic broker or through mobile applications.
Answer: Yes, individuals can trade in NASDAQ options from India.
Answer: NASDAQ stands for "National Association of Securities Dealers Automated Quotations."
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