Nvidia Stock Rally: How Indian Investors Can Ride The Wave
The American semiconductor manufacturer's stock has jumped 225.1% in the past year.
Shares of Nvidia Corp. have surged over 200% in the past year as the chipmaker benefits from the artificial intelligence frenzy.
The American semiconductor manufacturer's stock has jumped 225.1% in the past year. It has gained 40% since the start of 2024, with its market capitalisation increasing over $400 billion, bringing its valuation to $1.7 trillion.
The company's fourth-quarter revenue rose 3.65 times year-on-year to $22.1 billion, beating the Bloomberg estimate of $20.41 billion.
Let's take a look at how Indian investors can buy Nvidia shares:
Direct Investment
Direct investment in U.S. stocks refers to purchasing stocks listed on the U.S. stock exchange. There are two ways for an Indian investors to directly invest in U.S. stocks like Nvidia
The first option is to open an overseas trading account with a domestic broker that offers access to international stock markets. Brokers like HDFC Securities, ICICI Securities and Kotak Securities are domestic brokers that offer such services.
In order to open an overseas trading account one has to go through a KYC verification and also incur currency conversion fees as funds deposited in the account have to be U.S. dollar dominated.
The second option via the direct investment route is to directly open an account with a foreign broker that has a presence in India like Charles Schwab, Interactive Brokers, Ameritrade, among others.
Indirect Investment
Indian residents that are not keen on investing directly in the U.S. stock market can have indirect exposure by investing in mutual fund schemes that have exposure to international markets and will invest in foreign stocks.
Another way is to invest in exchange-traded funds. An investor can either invest in U.S. ETFs via a domestic or international broker or purchase an Indian ETF of international indices.
How Much Can You Invest?
Under the Liberalised Remittance Scheme, the Reserve Bank of India permits an Indian resident to invest up to $2,50,000, which is around Rs 2.07 crore per year, without any special permissions.
Additional Charges
Tax Collected at Source: The RBI's Liberalised Remittance Scheme imposes a 5% TCS on remittances exceeding Rs 7 lakh. This tax is applicable only to the portion exceeding Rs 7 lakh, and not the entire sum. Taxpayers can reclaim the TCS by filing an Income Tax Return.
Capital Gains and Dividend Tax: The U.S. taxes dividends at a rate of 25% for Indian citizens. Owing to the Double Tax Avoidance Agreement, an investor can claim credit for taxes paid abroad, so that one does not have to pay tax on the same income twice. While there is no capital gains tax on investments in the U.S., an Indian resident is liable to pay tax on the capital gains in India.
Bank Charges: Many banks impose a fee for foreign exchange conversion and transfers, often including one-time account set-up charges.
Brokerage Fees: Brokerages charge a fee on the buy-and-sell transactions made by investors.
Foreign Exchange Rate: Investing in U.S. stocks from India involves international transactions, so the foreign exchange rate at the time of purchase or withdrawal can affect costs and the number of units allocated.
