Stocks surge as Donald Trump returns! How to invest in US stocks from India - Step-by-step guide

US election 2024: As US election results near finalisation, it appears former President Donald Trump is on track for a political comeback. With victories in more than 30 states, including key battlegrounds like Pennsylvania, Georgia, Texas, and Florida, Trump is edging closer to reclaiming presidency. Meanwhile, Democratic candidate Kamala Harris has secured 20 states so far, as counting continues in remaining areas.

Trump’s current standing shows him with 267 electoral votes, just one state away from 270 needed to win. His strong showing in swing states, especially Pennsylvania, has boosted his chances, making him clear front-runner to become 47th President of United States.

How is US market reacting?

stock market is reacting swiftly to election developments, with Dow Jones futures up 2.63% and a 1100 point increase at time of writing this report. This surge reflects investor confidence, as many expect Trump’s policies, particularly those favouring business and lower taxes, to boost a more favourable ecomic environment.

Analysts anticipate furr market gains as final electoral results unfold. Tesla stocks are expected to remain in focus. Elon Musk ’s consistent support for Trump and his efforts to amplify former president's campaign through social media have put electric vehicle giant at centre of attention.

This political backing is likely to impact investor sentiment, especially in sectors like techlogy and electric vehicles, as market participants assess potential implications of Trump’s policies on se industries.

How can you tap into potential of US stock market?

Direct investment

first option is direct investment. You can open an account with a broker that provides access to US stock market. Some Indian brokers partner with US-based brokers to facilitate stock tring, while ors allow you to directly open accounts with US brokers.

Few things to keep in mind

• Sending money abro through a broker can be risky, especially if you don’t choose a reliable platform.
• Under Liberalised Remittance Scheme (LRS), you can invest up to $250,000 annually in foreign markets.
• money you invest cant be used for speculative instruments, so it’s important to be aware of s of investments allowed.

Mutual fund route

If you're new to investing, mutual funds are a convenient option. Many Indian mutual funds directly invest in US stocks or through a Fund of Funds (FOF) model. FOFs invest in or mutual funds, providing indirect exposure to US markets.

Key benefits

• Your investments are mand by professionals who select stocks on your behalf.
• Your money is spre across multiple US companies, reducing risk.

Limitations:

• Indian mutual funds have caps on how much y can invest in foreign equities, so you need to watch out for when investing window opens.
• se funds may t always be available, as re are restrictions on foreign investments in Indian mutual funds.

ETFs (Exchange-Tred Funds)

ETFs allow you to invest in a range of US stocks through a single investment, and y’re tred like individual stocks. ETFs are a flexible and cost-effective way to invest in US market, especially for those who want to maintain control over ir investments.

Key benefits

• You can buy and sell ETFs on stock exchange, giving you flexibility and control.
• ETFs generally have lower fees compared to mutual funds, which typically charge up to 2% in expense ratios.

However, one potential drawback is liquidity issues if ETF isn’t frequently tred.

GIFT Nifty route

GIFT Nifty route, available on NSE International Exchange, is ar option. This allows you to invest in US stocks through depository receipts issued by brokers who buy US shares.

Key benefits

• It offers a safer alternative since it's regulated by Indian exchange.
• process is relatively straightforward compared to dealing directly with foreign exchanges.

However, be aware of currency conversion charges, which can d to your transaction costs, and limited stock options available on NSE International Exchange, with potentially lower liquidity compared to US market