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Difference Between Indian Stock Investing And US Stock Investing

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Difference Between Indian Stock Investing And US Stock Investing

The economies of India and the US are quite different. India is a developing economy, while the US is a developed one. This means that the stock markets of the two countries also have some major differences.

This includes not just the differences in terms of the listed companies but also in regulation, volatility, valuation, size, and more. In fact, something as basic as the currency of exchange differs. Moreover, the Indian and the US stock markets are influenced by different factors, and they react differently to the various global events. Thus, you cannot employ the same investing strategies in the US as you would in India.

So, if you are planning to invest in stocks in the US, it becomes important to compare the Indian stock market with the US stock market. This will help you understand the pros and cons of investing in each of these markets and also give you a better idea about where to invest.

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To understand this in greater detail, let us look at the differences between the Indian and US stock markets.

Basis US stock investing Indian stock investing
Market volatility
The US stock market is less volatile in terms of long term investments.
The Indian stock market is considered to be comparatively more volatile.
Size and valuation
The US market is much larger in terms of both size and valuation. It is the largest stock market in the world with a market cap of $47.32 trillion
The Indian stock market is ranked 5th in the world in terms of market capitalisation, which is $3.21 trillion.
Currency of exchange
The buying and selling is done in terms of the US Dollars.
The Indian Rupee (INR) is the currency used.
Regulation
The US stock market is regulated by the US Securities and Exchange Commission (SEC).
The Securities and Exchange Board of India (SEBI) is the regulator of the Indian stock market.
Research requirement
Extensive research is required because of the large number of listed companies.
Research is more crucial as well as time consuming as not all information is easily available.
Top performing sectors
Stable sectors such as healthcare and technology are top performers.
Sectors linked with economic growth, such as power, are the top performers.
Global exposure
There is higher global exposure because of various MNCs listed on the US exchanges.
There is less global exposure as the Indian exchanges comprise mainly the domestic companies.
Portfolio diversification
There are a lot more avenues for investing because of the larger size of the US stock market.
The scope for diversification is less when compared to the US stock market.
Investment strategies
Focus should be on investing in companies with a good track record. You can also invest in new companies and capitalise on new ideas.
Focus should be on proper research before investing. Investment should be done in well-established companies.
Return on investment
Historically, the average annual return on investment has been approximately 10%.
The average annual return on investment has been around 15%, which is higher than the US stock market.
Listing requirements
More stricter listing requirements and a higher listing fee is charged.
Listing is more time consuming, as a company must be at least 3 years old before it can get listed.

Above mentioned are the major differences that must be noted before any investor ventures into the US stock market from India.

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Choose a suitable portfolio that matches your investment objective
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FAQs

  • How much percentage of us population is investing in stock market
    As of January 2022, 55% of adults in the US regularly invest in the stock market. The US stock market holds about a 59.9% share in the value of total world equity markets. The US stock market has a whopping $47.32 trillion market cap.
  • How can I buy US stocks from India?
    You can invest in the US stock market directly by opening an overseas trading account with a domestic or foreign broker. Be mindful of the charges and differences between the two stock markets before you pick the best option to invest in US stocks from India.
  • What are the tax implications for indian residents investing in us stock market?
    When determining the tax on US stock in India, dividends paid on US stock must also be included. The amount is taxed at a flat rate of 25%. So if the company declares a $100 dividend, you get $75. Due to the tax treaty between India and the United States, this rate is lower than the regular tax rate for foreign investors in the United States.
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