NRI Investment in Indian Stock Market: With the crippling of the global market at the hands of a pandemic, this is a time of widespread chaos. Only a futuristic vision can make a bull out of the bear. The novel COVID-19 might have induced a 30% fall for Sensex and Nifty but “you have to come out of your comfort zone, if you want to accumulate wealth in the ongoing turmoil in the equity market”, says Dalal Street Veteran Basant Maheshwari.
NRI Investment in Indian Stock Market: 5 reasons why the time is right
Amidst a major dilemma, NRIs are looking for the answer to the question: whether it is the right time to invest in the Indian Stock Market? Yes! It is the perfect time. Let us take you through 5 major reasons why It is the perfect time for NRIs to pump their money in the Indian Equity “stock”.
1. Growth Potential of the Market: A crashed market only grows. The COVID-19 pandemic has shaken the world to its core. Every market has seen a downfall and it is not delusional to expect it to regrow in a span of 3 to 4 years. The market veteran Mr. Basant Maheshwari believes if there is a slowdown post-Corona, then the markets will still rally. “It will rally just to celebrate the price in death with life. It will rally to tell investors that we are fine losing 2-3 quarters, but happy to be living. It will look ahead,” he says.
The ability of the market to retaliate will entirely depend on how we are combating the current situation of the widespread pandemic. We can not just sit and expect the market to grow back to normal, certain steps are necessary to help the markets become strong enough to regain their lost potential. On a very positive note, India is leading the battle against COVID-19 and we will now discuss how this upfront battle is enabling the markets to survive.
2. India’s positive Future: When compared to the developed countries like the USA and Italy, who have a more advanced medical retaliation capacity, India is leading as an example in containing the outbreak on a global scale. Now, to understand this we need to get hold of the following possible scenarios, as explained by PhillipCapital (Integrated Financial House with a Global Presence in over 17 countries), that we may encounter depending on how India controls the spread of COVID-19:
- If the situation worsens in India and Globally (Scenario 1): Although this situation is very rare as India is showcasing exemplary leadership in combating the COVID-19 outbreak and every country in the world is united against the pandemic. However, even if the situation in India worsens, India’s GDP growth will drop to the 3.5-4 percent level even as the global economy shifts towards recession which is still not a very bad picture for the Indian Market
- If the virus is contained in India but not globally (Scenario 2): In such a case, “we would be gradual buyers in equities. Indian economic impact will be limited and the FY21 GDP target will be 4.5-5 percent. But the March quarter impact will be severe,” PhillipCapital said. If the virus is contained in India and the situation worsens globally, Indian equities is outperformed and there will be a growth of 4 – 4.5 percent in India’s GDP amidst a global recession
- If the virus is contained in India as well as globally (Scenario 3): The Indian Markets might outperform in this situation. “We will be aggressive buyers in such a scenario at current levels. There would be manageable economic impact on India and the global economic slowdown will last 3-5 months,” PhillipCapital said
This is where a positive lockdown comes into play. So in times of such a peril, The SBNRI Team wishes for your safety and the well-being of the world. We must all be healthy before we help you become wealthy!
The market growth is very statistical, the growth rate after every major downfall has been astounding. In the next segment, we will take you through a journey of how there have been major downfalls in the global markets and the Indian market in particular as well, and with what great strength the markets resurrect themselves.
3. Exponential Growth in Valuation: As it has always happened, the markets always bounce back. The following statistics support the statement:
|Market Collapse||Fall (%)(w.r.t Indian Market)||Growth in 3 years (%)(w.r.t Indian Market)|
|Global Recession (1986-88)||40.8%||199.5%|
|Gulf War/Indian Fiscal Crisis (1990-91)||39.3%||320.5%|
|Harshad Mehta Scam (India)(1992-93)||56.4%||90.2%|
|Stock Market Stumble (1994-96)||41.6%||73.8%|
|Market Meltdown (1997-98)||40.5%||11.7%|
|Dot-Com Bubble (2000-01)||57.1%||110.6%|
|Central Election Results (India)(2004)||32.4%||238.3%|
|High Inflation (2006)||30.6%||73.2%|
|Financial Crisis (2008)||63.7%||124.6%|
|European Sovereign Debt Crisis (2010-11)||11.6%||80.8%|
Point to note: Crises are bridges to growth!
So, you need to take this situation as an opportunity to invest in the crumbled market and benefit from the gains that the resurrection of the market will harbor. In order to invest right, you need to identify the right sectors for investment, in the next segment we will guide you through that process.
4. Identification of the right sectors: The biggest problem that NRIs face is choosing the right stock for a long term investment. The market downfall will give you the option to identify the right sector to invest in. For example, companies that use crude oil as raw materials will benefit from the price fall of crude oil. The healthcare sector will see substantial growth given the current situation, especially the testing labs. Telecom industry is on the run as everybody is working from home, the need for internet services and entertainment services such as Netflix and Amazon Prime are exceeding expectations. FMCG and real estate are the least affected sectors among others. The fundamentals need to be set right in order to identify the right company and sector. Amit Jain, CEO and Co-Founder of Ashika Wealth Advisors said, “Bear markets are considered the best time to invest in stock markets. The worse the market’s performance is, the better returns you would get in the medium-long term”.
Once you have identified the right sectors to invest, it becomes essential to understand how to carry out the investments. In the next and final segment, we will help you in understanding the best way to invest considering the present market scenario.
5. Staggered Investing is the key: Every market crash brings in volatility. “It always rewards investors in the long term who take the benefit of such sharp fall. Markets may continue to fall in the near term, and that’s the time to start becoming greedy,” says Khemka of Motilal Oswal Financial Services. The market crash will invite abundant investing ventures but you need to opt for quality stocks and buy them in a staggered manner to ensure benefits on a long term basis. Yes AMC CEO Kanwar Vivek advised to stay invested in the markets and if liquidity is available with the clients then continue investing in a staggered manner keeping the long term horizon in mind. “The current market valuations are juicy and hence attractive for long term investors…it is time to start investing in equities for the long term,” he added.
Now you know why it is the right time for NRIs to invest in the Indian stock market. What comes next is a matter of ease and convenience. You might wonder how you can invest in the Indian Stock Market enjoying every aspect of comfort and luxury. Well, SBNRI has taken the responsibility to make your Banking and Investment issues seamless. In the next segment, we will guide you through how you can invest money in the Indian Share Market at the comfort of your fingertips while sipping at your hot coffee mugs on your couch.
How can NRIs invest money in the share market online?
NRI Investment in Indian Stock Market: Another brain-freezer for NRIs often constitutes confusion on how to invest money in the Indian Share Market ONLINE? The complexity is often backed by a lack of information. It is very simple. In order to invest in stocks an NRI needs a Portfolio Investment Scheme (PIS) Account with a designated bank branch in India which can either be opened by opting for a 3-in-1 trading account. The trading can be facilitated further by third party providers such as Zerodha and ICICI Direct.
NRIs can opt for a 3-in-1 account that consists of 3 separate accounts that can be opened together.
These accounts include:
- A Bank Account (a normal bank account where your money resides),
- A Trading Account (a share broker account which allows you to trade in equity, F&O etc. segments) and,
- A Demat account (it holds the equity shares purchased by you)
The process to open the 3 in 1 account is simple:
- Visit the bank website or third-party providers like Zerodha that provides the 3 in 1 account facility
- Enter your details and download the application form
- Fill the form and sign it. Attach the required documents and send it to the mentioned address. The required documents are:
- Copy of valid passport (pages with your name, address, date of birth, date and place of issue, expiry date, photograph, address, and signature)
- Proof of NRI status (by way of valid Employment/Residence Visa copy or Work/Residence Permit)
- Copy of Indian PAN card
- Proof of Overseas and Indian Address
- Recent passport size colour photograph
NRI Investment in Indian Stock Market
Fret not NRIs! The time is right. The market will correct itself. Such an opportunity only comes up once in a decade. All you need is a sharp eye and a calm mind to identify the green sectors from the red. Bet on the bull in a staggered manner, for the longer run.
For more details on how to invest in Indian Stock Market, contact us to get investment advisory from experts at SBNRI using the button below.