Returns chase leads more Indians to overseas stocks

More Indians are buying shares in US and European markets, sometimes even stepping into Brazil and China in their hunt for better returns, data from the central bank and platforms for overseas investment showed.

- Srushti Valdiya & Dipti Sharma

Underwhelming stock market returns in India -- a tepid 4.7% in the last 12 months -- and underperforming earnings growth, have prompted retail investors to venture abroad, lured by the promise of higher returns.

The proliferation of do-ityourself or DIY investment routes via brokers such as Vested Finance, Borderless and Appreciate have made investing abroad easier, compared to high thresholds for investing in destinations such as GIFT City, India's only operational international finance services centre.

Aspiring investors can install a trading app from these platforms, undergo a KYC or know your customer verifica~ tion process, and link their bank accounts with the platform to set up a liberalized remittance scheme, or LRS, account.

Under this Reserve Bank of India scheme, resident Indians are allowed to send up to $250,000 abroad for purposes such as education expenses, purchase of property, investments, and other purposes. Once the LRS account is up and running, the platform creates a US stock wallet for the retail investor to which money can be transferred and trades carried out.

Mint collated data from some of the top brokers who facilitate investments in global stocks and exchange traded funds for Indian investors. For Appreciate Wealth, the total number of overseas trades put by Indian retail investors has increased 44% year-on-year (y-o-y) in October with the value of trades expanding much faster at 164% for the same month.