Indian investors ramp up overseas bets as US markets outperform

Investments in overseas equity

Market participants say the spike coincides with strong performance in US equities after the return of Donald Trump as US President, renewed interest in technology stocks and the search for diversification beyond Indian markets.

On the other hand, foreign investors have pulled out Rs 86,960 crore (around $9.66 billion) from India in 2025 so far.

The relative performance gap between global and domestic equities has played a key role in driving these flows. The Nasdaq Composite of the US, which is heavily tilted towards technology and growth stocks, has delivered a robust return of around 21 per cent in calendar year 2025 as of December 22. In contrast, India’s benchmark BSE Sensex has gained a more modest 9.4 per cent over the same period, reflecting the lower returns in India in 2025.

Overseas investments by Indians are routed through the RBI’s Liberalised Remittance Scheme (LRS), which allows resident individuals to remit up to $250,000 per financial year for permitted current and capital account transactions. These include investments in foreign equities, exchange-traded funds (ETFs), bonds and mutual funds. Over the years, LRS has emerged as the primary channel for Indian households and high-net-worth individuals to build exposure to global assets in a regulated manner.

In FY25, Indians invested $1.698 billion ($1.51 billion in FY24) in overseas equity and debt, the RBI says.

Indian retail investors tend to access US markets predominantly through fund-of-funds (FoF) structures rather than by directly buying overseas stocks. These FoFs, offered by domestic mutual fund houses, invest in underlying US mutual funds or ETFs, often tracking popular indices such as the S&P 500 or Nasdaq. Around a dozen Indian mutual funds have invested in US markets. However, their investment is restricted to $7 billion in stocks and $1 billion in exchange traded funds.

Investment in FoF is seen as simpler, made in rupees and more convenient, as it eliminates the need to open and maintain overseas brokerage accounts while ensuring compliance with Indian regulations.

Direct investments in overseas equities are also gaining traction, especially among affluent and digitally savvy investors. Many are buying shares of global giants such as Apple, Microsoft, Amazon and Nvidia, either through Indian brokerage platforms that facilitate international investing or via overseas brokers using the LRS route. The appeal lies in access to global leaders in technology and innovation, diversification away from domestic economic cycles, and the potential benefit of holding dollar-denominated assets.

Experts advise caution

Experts caution that overseas investing is not without risks. Global equity markets, particularly technology-heavy indices, can be volatile if there are changes in inflation, interest rates and trade and geopolitical tensions. “Currency fluctuations can either enhance or erode returns when foreign investments are converted back into rupees. Investors must also navigate taxation on overseas income, including capital gains and dividends, and remain mindful of regulatory limits under the LRS framework,” an analyst said.

Despite these challenges, the steady rise in outward investments suggests that Indian investors are increasingly thinking globally. As domestic investors mature and gain greater awareness of international markets, overseas assets are becoming an integral part of portfolio construction rather than a niche allocation. If global markets continue to outperform and regulatory conditions remain supportive, the trend of rising overseas investments by Indians is likely to gather further momentum in the months ahead. Beyond equities, Indian investors are also allocating money to overseas debt instruments.

How to invest in US stocks

An Indian resident can invest in the US stock market directly by opening an overseas trading account with a domestic or foreign broker. Many domestic brokers have tie-ups with stockbrokers in the US. “They act as intermediaries and execute the trades. The cost of investing can be high, considering brokerage and currency conversion charges. A resident can also open an overseas trading account directly with a foreign broker with a presence in India,” says a note from Groww, an online investment platform.

Indian residents can invest in US stocks like Amazon or Apple through GIFT City in Ahmedabad via two primary methods: by purchasing Unsponsored Depositary Receipts (UDRs) on the NSE IX or through platforms offering direct access via the India INX that allows trading in overseas exchanges, including US market. This method involves the Indian broker partnering with a US-based broker to facilitate the purchase of actual US-listed stocks and ETFs.