{"id":6547,"date":"2024-01-10T16:04:31","date_gmt":"2024-01-10T10:34:31","guid":{"rendered":"https:\/\/aayushbhaskar.com\/?p=6547"},"modified":"2024-02-10T21:26:28","modified_gmt":"2024-02-10T15:56:28","slug":"nse-ifsc-guide-for-beginners","status":"publish","type":"post","link":"https:\/\/aayushbhaskar.com\/nse-ifsc-guide-for-beginners\/","title":{"rendered":"How to Invest in U.S. Stocks with NSE IFSC – Beginners Guide","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"

Indian investors have been waiting for this a long time. NSE IFSC recently announced trading in 50 popular US stocks in the form of unsponsored depository receipts for Indian investors.<\/p>\n

Deposit receipts can be deposited into your Demat account opened through an approved GIFT City Broker.<\/p>\n

You can trade on the NSE IFSC platform within the Liberalized Remittance Scheme (LRS) mandated by the Reserve Bank of India (RBI).<\/p>\n

If you are looking for information on NSE IFSC and how to trade in International stocks, then you are at the right place.<\/p>\n

Here, I will tell you about the things which can surely help you in getting the information, and that too in simple language.<\/p>\n

\"\"<\/p>\n

Let us understand the important concepts related to this recent innovation by NSE IFSC.<\/p>\n

NSE IFSC<\/span><\/h3>\n

NSE IFSC is an abbreviation of the National Stock Exchange – Indian Financial System Center.\u00a0\u00a0<\/span><\/p>\n

NSE IFSC Limited (also known as NSE International Exchange) is a\u00a0<\/span>fully owned subsidiary company<\/span><\/em><\/strong>\u00a0of the National Stock Exchange Limited (NSE).<\/span><\/p>\n

NSE IFSC has set up an international exchange in GIFT City, Gandhinagar. It is the first international exchange established on the recommendation of the Securities and Exchange Commission (SEBI). <\/span><\/p>\n

The idea is to provide a platform for Indian corporates to raise resources from global investors and Indian investors to invest in global markets.<\/span><\/p>\n

GIFT City<\/span><\/h3>\n

GIFT City is a business city, located in Gandhinagar, Gujarat.<\/span><\/p>\n

It is being built by Gujarat International Finance Tec-City (GIFT) Company Limited, a 50:50 joint venture between the Government of Gujarat and the Government of India, with investments from private sector investors.<\/span><\/p>\n

It is being developed as a global financial and IT services hub on the lines of similar global hubs such as the Wall Street (United States), Lujiazui (China), Shinjuku (Japan), La D\u00e9fense (France), and Canary Wharf (United Kingdom).<\/span><\/p>\n

The development will be focused on creating a dedicated International Financial Services Center (IFSC) that will offer world-class infrastructure, institutional support, and a regulatory environment for the growth of the financial services sector in India.<\/span><\/p>\n

It will also have a Special Economic Zone (SEZ) that will provide additional benefits to companies located there. Click here<\/a> to know more about GIFT City.<\/span><\/p>\n

Depository Receipts (DRs)<\/span><\/h3>\n

A depository receipt is a negotiable certificate that represents the ownership of one or more shares of a company traded on a local exchange and held in custody by a foreign bank.<\/span><\/p>\n

Depository receipts allow you to invest in overseas markets without opening an account abroad or establishing a foreign residency. <\/span><\/p>\n

They are traded on the local stock exchange but reflect the price of the underlying shares that they represent on the foreign exchange. <\/span><\/p>\n

The investor benefits from any dividend<\/a> or interest payments made by the foreign company and makes money only when he sells his depository receipts at a profit.<\/span><\/p>\n

Sponsored and Unsponsored Depository Receipts<\/span><\/h3>\n

If the company provides a DR, it is called a sponsored DR, and if the company is not involved, it is called an unsponsored DR.\u00a0<\/span><\/p>\n

Indian companies such as HDFC, ICICI Bank, Dr. Reddy’s, Infosys, and Wipro are traded on U.S. exchanges through sponsored Depository Receipts.<\/span><\/p>\n

However, the top 50 U.S. companies will be traded on NSE IFSC through unsponsored Depository Receipts.<\/span><\/p>\n

Role of HDFC in NSE IFSC<\/span><\/h3>\n

DRs traded on NSE IFSC are unsponsored. In other words, companies based in the U.S. are not issuing depositary receipts. <\/span><\/p>\n

NSE IFSC has partnered with the HDFC’s International Banking Unit, which holds U.S. shares on behalf of NSE IFSC, and HDFC-IBU will issue DRs to NSE IFSC’s depository account in India.<\/span><\/p>\n

\"\"<\/p>\n

Liberalized Remittance Scheme (LRS)<\/span><\/h3>\n

Under the Liberalized Remittance Scheme (LRS) introduced by the Reserve Bank of India (RBI), you can freely purchase foreign exchange up to U.S. $250,000 per financial year (April\u2013March) for any permissible current or capital account transaction, or a combination of both.<\/span><\/p>\n

That means you can purchase securities up to the U.S. $250,000 in a financial year, which is approximately 1.9 Crores at present.<\/span><\/p>\n

How to Invest in US Stocks in NSE IFSC?<\/span><\/h3>\n

You can buy US stocks<\/a> the same way you buy other Indian securities. <\/span><\/p>\n

You can follow these simple steps and become an investor in the world’s largest companies listed on the U.S. stock exchange.<\/span><\/p>\n

    \n
  1. Account Opening<\/span><\/strong>: Open a trading and Demat account with an NSE IFSC registered broker. Y<\/strong>ou can click here<\/a> to find the list of NSE IFSC registered brokers<\/strong>. If your current broker is on the list, you can contact it for further formalities like KYC, etc.<\/span><\/li>\n
  2. Fund Transfer<\/span><\/strong>: The next step is to transfer funds from your local bank account to NSE IFSC registered broker’s bank account. I recommend you to use Netbanking or UPI for this purpose.<\/span><\/li>\n
  3. Trading<\/span><\/strong>: <\/span>Once the funds appear in your brokerage account, you are ready to trade NSE IFSC US stocks. NSE-IFSC receipts are settled in T + 3 cycles. That is, the depository receipt will be credited to your Demat account 3 days after the transaction date. Funds from the sale of receipts will be credited in 3 days.<\/li>\n<\/ol>\n

    Do you have a choice of U.S. Stocks?<\/span><\/h3>\n

    No.<\/span><\/p>\n

    On March 3rd, NSE IFSC began trading unsponsored depositary receipts on eight U.S. equities.<\/p>\n

    You can trade on the following eight U.S. stocks and the facility for trading on the remaining 42 stocks will soon be facilitated through the NSE IFSC under the unsponsored depositary receipts (DR) route.<\/span><\/p>\n

      \n
    1. Alphabet<\/span><\/li>\n
    2. Amazon<\/span><\/li>\n
    3. Meta Platforms<\/span><\/li>\n
    4. Netflix<\/span><\/li>\n
    5. Apple<\/span><\/li>\n
    6. Walmart<\/span><\/li>\n
    7. Tesla<\/span><\/li>\n
    8. Microsoft<\/span><\/li>\n<\/ol>\n

      Click here<\/a> for a complete list of 50 stocks that are under regulatory sandbox by IFSC authorities.<\/span><\/p>\n

      What is the Receipt Ratio in NSE IFSC?<\/span><\/h3>\n

      It represents the number of NSE IFSC Receipts representing one share of the Underlying Company.\u00a0<\/span><\/p>\n

      Since stocks like Amazon are valued at more than Rs. 2,00,000\/-, you’ll be allowed to buy in fractionals. <\/span><\/p>\n

      Amazon’s DR ratio is 200. This means if you want to invest in Amazon, you can buy a minimum of 1\/200th part of its share, which is just Rs. 1000\/- as per the current price.<\/span><\/p>\n

      As a result, U.S. stocks will become more affordable for retail investors like us.<\/span><\/p>\n

      Click here<\/a> to find the NSE Receipt Ratio of all 50 U.S. stocks available for trading in NSE IFSC.<\/span><\/p>\n

      How is investing through NSE IFSC different from Startups like Vested, INDMoney, etc?<\/span><\/h3>\n

      NSE IFSC is regulated by SEBI, and that solves for a major risk that comes with Indian startups partnering with International brokerage firms which aren\u2019t under the jurisdiction of Indian regulators. <\/span><\/p>\n

      This can offer you a certain level of regulatory comfort.<\/span><\/p>\n

      NSE IFSC is offering unsponsored receipts whereas you can buy fractional shares using other platforms. <\/span><\/p>\n

      Your receipts bought through NSE IFSC will reflect in your Demat Account, whereas in other cases, shares are held in a margin account maintained by an international broker.\u00a0\u00a0<\/span><\/p>\n

      PROS of NSE IFSC<\/span><\/h3>\n
        \n
      1. You can invest in an international market hassle-free from India.<\/span><\/li>\n
      2. The main benefit of this platform is that it will eliminate counterparty risk and currency risks concerning U.S.-based brokers and gives you direct access to international capital markets and diversification benefits.<\/span><\/li>\n
      3. It gives you the provision to invest in fractional units of shares in the form of receipts.<\/span><\/li>\n
      4. Corporate activities such as dividend and bonus issues are open to you. You will get the benefits pro-rata based on the receipts you are holding.<\/span><\/li>\n
      5. India’s currency will be accepted as a settlement currency on all transactions.<\/span><\/li>\n
      6. Investing in foreign stocks can help you diversify your portfolio, reduce risk and boost returns.<\/span><\/li>\n<\/ol>\n

        CONS of NSE IFSC<\/span><\/h3>\n
          \n
        1. You can trade only in the top 50 US stocks unsecured depository receipts created by NSE IFSC. That means you have less opportunity to invest in small and mid-sized companies in the U.S.A. You will not get a chance to invest in other global exchanges. NSE IFSC is currently restricted to the top 50 companies in the U.S.A.<\/span><\/li>\n
        2. For another nine months, the product will be in a regulatory sandbox. Amid the sandbox testing period, the number of investors who could be onboarded is restricted to 10,000.\u00a0<\/span><\/li>\n
        3. NSE IFSC Exchange will charge a brokerage of approximately 0.12% which is high when you compare this to the 0.00345% charged within India for equity transactions.<\/span><\/li>\n
        4. Your investment will be liable to transaction costs, brokerage fees, forex charges, and any income from dividends will be subject to taxation rules of the U.S. Government. Currently, dividend income is charged with 25% tax in the U.S..<\/span><\/li>\n
        5. The minimum price movement of a share will be 1 cent i.e. approx 70 paise which is high as compared to tick size of 5 paise in Indian Markets.<\/span><\/li>\n
        6. The exchange timings are marginally distinctive from Indian market hours. The NSE IFSC receipts will be traded between 8 pm to 2:30 am (the following day).<\/span><\/li>\n
        7. The SIP option isn’t available for investment in U.S. Stocks through NSE IFSC receipts.<\/span><\/li>\n<\/ol>\n

          Why investing in U.S. Markets is important?<\/span><\/h3>\n

          Investing in the U.S. market is one of the most important investment decisions that you will make. The U.S. Stock Market is among the most diverse in the world! <\/span><\/p>\n

          This diversity offers a lot of investment opportunities that can help you reach your investment goals.<\/span><\/p>\n

          The U.S. has a strong economy and there are always many companies with good growth prospects that are listed on the various exchanges.<\/span><\/p>\n

          Final Words<\/span><\/h3>\n

          Investing in the U.S. market may sound hugely intimidating, but make sure that you set your goals before you start investing. It makes no sense to invest if you don’t know what it is that you want to accomplish. <\/span><\/p>\n

          Decide exactly how much risk you want to take on and how much money you will need to achieve your financial goals.<\/span><\/p>\n

          I hope that this article has been helpful to you and has provided some valuable knowledge.<\/span><\/p>\n

          I welcome comments, suggestions, and feedback concerning this article, as well as discussions regarding this topic in general.\u00a0<\/span><\/p>\n\"\"","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"excerpt":{"rendered":"

          Indian investors have been waiting for this a long time. NSE IFSC recently announced trading in 50 popular US stocks in the form of unsponsored depository receipts for Indian investors. Deposit receipts can be deposited into your Demat account opened through an approved GIFT City Broker. You can trade on the NSE IFSC platform within …<\/p>\n\"\"","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"author":6,"featured_media":6573,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[4],"tags":[34,210,108,160],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/aayushbhaskar.com\/wp-content\/uploads\/2022\/03\/NSE-IFSC-Buying-U.S.-Stocks-from-India-Made-Easy-or-Something-Completely-Different-Explained.png","acf":[],"yoast_head":"\nHow to Invest in U.S. Stocks with NSE IFSC - Beginners Guide - Aayush Bhaskar<\/title>\n<meta name=\"description\" content=\"We explain and give you information on NSE IFSC and how to trade in international stocks through unsponsored depository receipts.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/aayushbhaskar.com\/nse-ifsc-guide-for-beginners\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to Invest in U.S. Stocks with NSE IFSC - Beginners Guide - Aayush Bhaskar\" \/>\n<meta property=\"og:description\" content=\"We explain and give you information on NSE IFSC and how to trade in international stocks through unsponsored depository receipts.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/aayushbhaskar.com\/nse-ifsc-guide-for-beginners\/\" \/>\n<meta property=\"og:site_name\" content=\"Aayush Bhaskar\" \/>\n<meta property=\"article:published_time\" content=\"2024-01-10T10:34:31+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-02-10T15:56:28+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/aayushbhaskar.com\/wp-content\/uploads\/2022\/03\/NSE-IFSC-Buying-U.S.-Stocks-from-India-Made-Easy-or-Something-Completely-Different-Explained.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1920\" \/>\n\t<meta property=\"og:image:height\" content=\"1080\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@FinAayush\" \/>\n<meta name=\"twitter:site\" content=\"@AforBhaskar\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\">\n\t<meta name=\"twitter:data1\" content=\"8 minutes\">\n<!-- \/ Yoast SEO Premium plugin. -->","gt_translate_keys":[{"key":"link","format":"url"}],"_links":{"self":[{"href":"https:\/\/aayushbhaskar.com\/wp-json\/wp\/v2\/posts\/6547"}],"collection":[{"href":"https:\/\/aayushbhaskar.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/aayushbhaskar.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/aayushbhaskar.com\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/aayushbhaskar.com\/wp-json\/wp\/v2\/comments?post=6547"}],"version-history":[{"count":1,"href":"https:\/\/aayushbhaskar.com\/wp-json\/wp\/v2\/posts\/6547\/revisions"}],"predecessor-version":[{"id":12498,"href":"https:\/\/aayushbhaskar.com\/wp-json\/wp\/v2\/posts\/6547\/revisions\/12498"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/aayushbhaskar.com\/wp-json\/wp\/v2\/media\/6573"}],"wp:attachment":[{"href":"https:\/\/aayushbhaskar.com\/wp-json\/wp\/v2\/media?parent=6547"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/aayushbhaskar.com\/wp-json\/wp\/v2\/categories?post=6547"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/aayushbhaskar.com\/wp-json\/wp\/v2\/tags?post=6547"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}