The US stock market is estimated to be worth over $55 trillion as of 2024. As the world’s largest economy, its financial markets, by default, rank as the biggest and most liquid. But what does this mean for you as an Indian investor?
While the Indian market also offers great investing and trading opportunities, limiting yourself to one economy can restrict growth. Market downturns and sector-specific limitations can affect returns. US stocks help you manage these challenges by offering growth potential, diversification, and stability.
Let’s explore in detail how US stocks can help you build a strong investment portfolio.
Greater diversification with world-class companies
US stock exchanges host some of the world’s most prestigious companies that drive global trends and are responsible for shaping the future. These include:
- Microsoft
- Apple
- Meta Platforms
- Amazon
- Nvidia
- Tesla
- Alphabet (Google)
All these multinational giants generate revenue from many countries, so your returns don’t depend on one economy. This worldwide reach also reduces risks from domestic market fluctuations.
Currency advantage
US stocks in your portfolio act as a hedge against rupee depreciation. For example, in 2014, one US dollar was valued at around ₹60. On February 13, 2025, it was trading at ₹86.74, reflecting a 40%+ depreciation of the rupee.
As you can see, when you invest in US stocks from India, your returns don’t just come from stock growth but also from currency appreciation. Even if a US stock earns moderate returns, the rising dollar value could add an extra boost to your portfolio value.
Opportunity to earn impressive returns
US stocks have a strong reputation for delivering above-average returns over the long term. For example, Netflix started at $15 per share in May 2002 and climbed to $1,033.11 by 13 February 2025. Similarly, Tesla launched its IPO at $17 a share and now costs around $351.
These companies grew from niche players to global leaders and are generating massive returns. Investors who spotted their potential early made life-changing profits.
Affordability via fractional shares
Buying a full US stock can be expensive because many top companies trade at hundreds or even thousands of dollars per share. Amazon, for example, costs over $228.28 per share (13 February 2025), which is roughly ₹20,000.
Fractional shares solve this problem. Instead of buying high-priced stocks, like Tesla or Amazon, in whole units, you can have a small portion based on your budget. Suppose a stock trades at $500 per share, but you possess only $50 to invest, you can still own 10% of a share. A good trading app makes investing in the US market even easier by helping you start with $1.
Tax benefits
Dividends from US stocks face a 25% tax deduction at the source. If you earn $200 in dividends, $50 (25% of $200) is deducted as tax in the US, and you are left with $150. With the Double Taxation Avoidance Agreement (DTAA) between the US and India, you can offset this $50 against your tax liability in India when filing your ITR. This way, you do not have to pay taxes twice on dividends.
One more advantage is that capital gains tax does not apply to foreign investors in the US. Your tax liability on capital gains arises only in India, based on the holding period.
To sum up
Adding US stocks to your portfolio can offer growth potential, stability, diversification, and protection against currency depreciation. Although Indian stocks also offer a lot of high-growth opportunities, investing in the world’s most influential market makes your portfolio stronger and more resilient.
MO RISE app by Motilal Oswal makes investing in US stocks from India hassle-free and affordable for everyone. All you have to do is open a demat account on the trading app and add funds, which will be converted to USD. Now, pick the US stock or Exchange-Traded Funds (ETFs) you wish to buy and complete the transaction.
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