#investors! #IndianCryptoTrends #indianCryptoBan #IndianCryptoCommunity #Binancepen_spark Indian investors have traditionally concentrated on their domestic market due to strong economic growth and robust fundamentals. This home-market focus has often resulted in missed opportunities abroad, compounded by the complexities of transferring large sums of money internationally and the additional paperwork involved.
The Potential of Global Diversification
In contrast, global investors actively seek to diversify by investing in markets around the world. Consider this: can the Indian market offer the same scale of opportunity as global giants like Google, Nvidia, Microsoft, Sony, or Tencent? When we widen our scope to a global investment platform, numerous large, high-quality businesses become available, offering both the advantages of diversification and enhanced growth potential.
By focusing solely on domestic markets, Indian investors overlook many fast-growing sectors where Indian companies are either underrepresented or nearly absent. Industries such as gaming, artificial intelligence, robotics, and semiconductors are paving the way for the future, yet have little presence in India. From this perspective alone, global investing makes perfect sense.
Another notable benefit of investing globally is the favorable valuations. Indian markets have traditionally been more expensive, often due to limited floating stocks being chased by large flows of capital.
For example, Pfizer India trades at a price-to-earnings (PE) ratio of 45 on the NSE, while the same company trades below 20 in the US. Similarly, Hindustan Unilever’s PE in India stands at 62, compared to Unilever’s 20 PE in the US. These lower valuations in global markets are typically attributed to their larger depth, ample floating stocks, and institution-driven investor base.
In India, the scarcity of floating stocks and fewer opportunities often push valuations higher. For investors, valuation is a key metric, as overpaying for stocks increases the risk of losses during market downturns or periods of earnings declines.
Comparing Global Growth
It’s a common belief that India is one of the few countries experiencing strong growth. While India has indeed performed exceptionally well, other markets have also seen significant growth. An analysis of stock indices from countries like the UK, the US, and various European nations reveals that they have delivered strong results over the past decade, both in local currency and rupee terms. For example, the S&P 500 has achieved a compound annual growth rate (CAGR) of 10.5% in the past 10 years.
In addition to diversification and growth, another factor favoring global investing is the positive currency dynamic. The Indian rupee has consistently depreciated over the years, a trend that is likely to continue. Any further depreciation of the INR adds to the overall returns on global investments.
Taxation and Equalized Opportunities
Previously, investing in foreign equities was taxed at 20% with indexation, making it less tax-efficient compared to Indian equities. However, the latest budget changes have leveled the playing field, with foreign equities now being taxed at the same 12.5% rate as Indian equities. This development makes global investments much more attractive to Indian investors.
Building a Global Portfolio for Long-Term Growth
Indian investors can take advantage of the Liberalized Remittance Scheme (LRS), which allows them to remit up to USD 250,000 annually. By embracing this opportunity, investors can build a global portfolio that positions them for long-term capital appreciation and growth.