Ever wished you could invest in the Indian tire manufacturer MRF Ltd? Sadly, many of us cannot afford to buy even a single share of the company. Trading at ₹79,541.45 at the time of writing, it is the most expensive Indian stock, and Indian market regulations don’t allow us to buy small chunks of stocks.
That’s where the US markets work differently. Shares of Google parent Alphabet (GOOG) are priced at $95.15 on the Nasdaq Stock Exchange, at publishing time. But US markets allow fractional trading, where you can buy a small portion of your favorite company for as little as $1 (₹83). But that’s not all.
Read on to find out about other differences.
The US stock market has different stock exchanges, trading hours, and global reach, compared to the Indian stock market. Factoring all of this in should help you decide whether to take the plunge into US stocks.
Many of us investors are familiar with Indian stocks and markets. As it is our home market, we are well aware that India has two major stock exchanges: The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The corresponding stock market index for the BSE is the 30-stock Sensex, whereas the NSE Index is called Nifty. The Securities and Exchange Board of India (SEBI) oversees all stock market and corporate activities in India.
On the other hand, the United States has two main stock exchanges.
The bigger and older New York Stock Exchange (NYSE) largely lists blue chips and industrial companies such as International Business Machines (IBM) and General Electric (GE), while the Nasdaq is dominated by technology firms like Apple Inc. (AAPL) and Google parent Alphabet (GOOG). NYSE and the Nasdaq are both located in New York.
Though trading happens online, NYSE still maintains a physical trading floor, while the Nasdaq does not have one.
The major indices in the US are the Dow Jones Industrial Average (DJIA), the Nasdaq Composite, and the S&P 500. US markets and the financial services sector are governed by the Securities and Exchange Commission (SEC) and a private, not-for-profit organization called the Financial Industry Regulatory Authority (FINRA), which in turn is directly supervised by the SEC.
Indian stock markets are open from 9.15 a.m. to 3.30 p.m. on weekdays. US market follows the Eastern Standard Time, but in Indian time, the US trading hours are from 7.00 p.m. to 1.30 a.m. IST, Monday to Friday, during daylight savings time (March to November). The rest of the year, the US market is open from 8.00 p.m. IST to 2.30 a.m. IST. Basically, there is no overlap between the working hours of Indian and US markets.
India, a fast-growing economy, has a number of multinational companies such as Tata Motors and Reliance Industries. These companies have their operations in a few foreign countries. US corporations such as Microsoft Corp. (MSFT), and Amazon.com Inc. (AMZN), on the other hand, operate on a much wider global platform, garnering revenues from many distant corners of the world, including India.
Buying the shares of such US corporations would give Indian investors the opportunity to be a part of their success story without the risks of investing in unknown markets. Moreover, US markets could enable you to access some of the safer global companies such as the Chinese e-commerce giant Alibaba.com (BABA), UK liquor company Diageo plc. (DEO), and Taiwan Semiconductor Manufacturing (TSM)—all of which are listed on the NYSE.
In short, both Indian and US markets offer attractive investment opportunities. However, remember, diversification is important to keep your portfolio balanced. US markets offer a safe, attractive option for Indian investors looking to invest in foreign markets.