NSE International Exchange, or NSE IFSC Ltd. offers trading in over 50 popular US stocks such as Apple, Amazon and Tesla. Still, investors are not impressed – none of the stocks have seen active trading in the past few sessions, data from the company’s website shows.
NSE IFSCA subsidiary of the National Stock Exchange of India, Gujarat International Finance Tec City (GIFT)-International Financial Service Center (IFSC) is located at Gandhinagar in Gujarat.
The lack of trading on NSE’s GIFT platform is despite more Indian investors eyeing value buying opportunities in US stocks, after some renowned tech companies cracked 20-50% since the start of the year. However, its rival platforms are seeing active trading in foreign stocks. NSE IFSC did not respond to Mint’s queries.
According to experts, a major advantage of investing in these global platforms is that all trading and settlements take place in dollar terms, which helps in avoiding the effects of currency fluctuations.
Earlier this year, India International Exchange Limited (India INX), a subsidiary of BSE, started offering trading in US stocks to Indian investors along with NSE IFSC.
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As per the data provided by India INX, the platform is witnessing active trading in 225 global stocks and ETFs.
Whereas, NSE created unsecured depository receipts in GIFT City, India INX acts as an intermediary platform (rather than an exchange). Investors in India INX directly transfer money from India to the US or other foreign countries without touching the IFSC.
While NSE IFSC has 50 stocks on its platform, India INX provides access to the entire universe of stocks and exchange-traded funds (ETFs) listed in the US and other markets.
Monthly average daily trading volumes for May and June 2022 were $42,953.90 and $195,139.22, respectively. Furthermore, the average daily volume in the past week as of July 1, 2022 was $462,036, representing an increase of over 800% over the average daily volume of the past five months, data from India INX Global Access showed.
Under the Liberalized Remittance Scheme (LRS) of the Reserve Bank of India (RBI), resident Indians can remit up to $250,000 in current or capital account transactions each fiscal year.
Mint had earlier reported that according to RBI data, outflows for investments in international stocks and bonds under LRS increased to $747 million in FY12, up 58% from $472 million in FY2011. It also recorded an all-time high monthly remittances of $104.5 million in March, data shows.
The increase in preference for the LRS route is partly due to restrictions on foreign investment by Indian mutual funds.
The Securities and Exchange Board of India (Sebi) in January asked fund houses investing in foreign securities to stop further investments in foreign stocks to avoid breaching industry-wide foreign limits.
According to a SEBI circular dated June 3, 2021, mutual funds can make foreign investments of up to $1 billion per fund house, with an aggregate industry limit of $7 billion.