NSE International Exchange, or NSE IFSC Ltd, offers trading in 50 popular US stocks such as Apple, Amazon, and Tesla. Yet, investors don’t seem impressed—none of the scrips has witnessed active trading over the past few sessions, data from the company’s website showed.
NSE IFSC, a subsidiary of the National Stock Exchange of India, is located in Gujarat International Finance Tech City (GIFT)-International Financial Service Centre (IFSC) 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 of the famed tech companies cracked 20-50% since the start of the year. Its rival platforms, though, have been witnessing active trading in overseas stocks. NSE IFSC did not respond to queries from Mint.
According to experts, one key benefit of investing in these global platforms is that all trading and settlement happens in dollar terms, which helps avoid the impact of currency fluctuations.
Earlier this year, India International Exchange Ltd (India INX), a subsidiary of BSE, along with NSE IFSC had started offering trading in US stocks to Indian investors.
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According to data provided by India INX, the platform is witnessing active trading in 225 global stocks and ETFs.
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While, NSE had created unsecured depository receipts in GIFT City, India INX acts as an intermediary platform (rather than an exchange). Investors in India INX transfer money straight from India to the US or other foreign countries without it ever touching the IFSC itself.
While NSE IFSC has 50 stocks on its platform, India INX offers access to the entire universe of stocks and exchange-traded funds (ETFs) listed in the US and other markets.
The monthly average daily trading volume for May and June 2022 was $42,953.90 and $195,139.22, respectively. Further, the average daily volume over the last one week till 1 July 2022 was $462,036, showing over 800% growth in average daily volumes 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 every fiscal year.
Mint had earlier reported that outflows for investment in international stocks and bonds under LRS rose to an all-time high of $747 million in FY22, up 58% from $472 million in FY21, according to RBI data. It also recorded an all-time high monthly remittance of $104.5 million in March, data showed.
The rise in preference for the LRS route has partially been driven by restrictions on overseas investment by Indian mutual funds.
The Securities and Exchange Board of India (Sebi) in January had asked fund houses investing in overseas securities to stop further investments in foreign stocks to avoid breach of industry-wide overseas limits.
Mutual funds can make overseas investments of up to $1 billion per fund house, with the overall industry limit of $7 billion, according to a Sebi circular of 3 June 2021.
