a GIFT for Indian investors

a gift for Indian investors

if you are an investor or a trader, you are probably familiar with the National Stock Exchange (NSE) or Nifty. Along with the Bombay Stock Exchange (BSE) or Sensex, it makes up the two benchmark equity indices of India. however, there are plenty of other indices which are based on market cap of companies (smallcap, midcap, etc.), their sectors (Metal, Realty, etc.), and more. similarly, there are other entities which facilitate trading. the Multi Commodities Exchange (MCX), which features commodities and their derivatives, for example.

now, NSE IFSC — a wholly owned subsidiary of the NSE, based at the International Financial Service Centre (IFSC) in Gujarat International Finance Tech (GIFT) city — is opening up access for Indian retail investors to US share markets.

what’s the NSE IFSC?

one of the primary purposes of setting up the NSE IFSC was to regain the equity futures trading market share lost to Singapore. it currently allows trade in indices such as the Nifty50, Nifty Bank and Nifty IT. derivative trades in bullion and currency derivatives on global currency pairs such as Euro-Dollar and British Pound-Dollar are also available. opening up the US markets to Indian investors is an excellent way to strengthen its foothold.

how will that work?

many domestic investors might not be capable of purchasing whole units of US stocks. for example, a share of Warren Buffett's Berkshire Hathaway is priced around $315,000 or  ₹2.16 crore. so trading will be allowed in fractional units of stocks, which can be split into as many as one million fractional units. additionally, there will be a remittance limit of $250,000 per person per financial year, as defined by the Liberalised Remittance Scheme.

why now?

over the past year, a record number of new Indian investors have joined the markets. retail investors’ share of the market is also at record highs. having witnessed the stellar performance of cryptocurrencies and stocks such as Tesla and the Big Tech group, they are no longer content with being limited to just domestic markets. 

besides, countless tech platforms have popped up across the world, which have simplified overseas investments. so, they’re no longer tied down to traditional paperwork-heavy methods. domestic platforms such as Groww, 5Paisa, Stockal, and many others are making investing in US stocks a breeze.

the NSE has to adapt in order to thrive. whether or not it succeeds with this move, it’s certainly a gift for retail investors. one that’s likely to spur further innovation, access to more markets, and keep on giving.