How to invest in the Indian stock market from Canada? Explain with the help of an example.
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- Updated On:02-Apr-2024
- Replies:3
Short Answer
There are various steps for Canadian NRI to invest in share market in India. Let's figure out how to invest in Indian stock market from Canada.
Detailed Answer
Indian Stock Markets
India is not only the 5th largest economy in the world, but from September 2022 it is also the 5th biggest equity market. The outlook of the Indian economy and the market is stable and appealing to invest in.
Indians are spread across the world and they always wish to invest in Indian stock markets. The Foreign Exchange Management Act (FEMA) allows non-resident Indians to invest in Indian markets.
Let us explore how to invest in the Indian stock market from Canada.
Important Terms to know
Before knowing how to invest, to start investing, let us learn a few terms:
**NRI **is an Indian citizen who stays in foreign countries for 183 days or more in a particular financial year or a citizen who has stayed less than 365 days in India in the past 4 consecutive financial years and less than 60 days in the existing financial year.
A Non-resident External Account (NRE) is a savings bank account and is used to transfer money earned abroad to India. A Non-resident ordinary Account (NRO) is used to maintain and manage the money earned by a NRI within India.
A **Repatriable Demat **account is linked to a NRE account and allows you to transfer funds from India to abroad or vice versa. A **non-repatriable account **is linked to an NRO account and allows you to trade in Indian markets but doesn’t allow you to transfer the funds.
The Canadian Non-Resident Indian can invest through a Portfolio Investment Scheme (PIS) or a Non-PIS account. A PIS account is specially used to invest in the share market and is supervised by the RBI, whereas a Non-PIS account is used to invest anywhere in India including its share market.
How to invest in the Indian stock market from Canada?
The Canadian NRI must firstly open a NRE or NRO account based on your needs, then open a repatriable or a non-repatriable account demat account and link it to their NRO or NRE account. Later, they can invest in Indian stock markets though a PIS or non-PIS account. A PIS supports both an NRE and NRO account, but a non-PIS account supports only a NRO account.
Example:
Jai is a Canadian NRI who would like to invest only in the Indian share market and would like to transfer the funds to Canada and vice versa. For this purpose, he has to open a NRE account, link it to a repatriable demat account and start trading with a PIS account.
More or less the process of investing is similar. You just need to know some technicalities before entering and placing orders. Now that the basic terms are clear, here are some important pointers that will help you while placing an order as a Canadian:
- As an NRI you will not be allowed to do intraday trading. So, you have to go for the delivery based route.
- There is a ceiling limit on the investment done in shares and convertible debentures.
- As per the RBI, an NRI is prohibited from investing in certain types of shares.
A Canadian resident can also invest in Indian market through the Qualified Foreign investor (QFI) route, where he/she needs to open a depository account, demat, trading account, and a single non-bearing rupee account. Once done, he/she must apply and get a PAN card and undergo KYC and AML identity check. After successfully following the above steps he/she can start investing in the Indian stock market.
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Discussion (2)
For a Canadian NRI, the first step is to open an NRO account and then go for opening a Demat account. After that you need to link both these accounts. Then you are free to invest in any Canadian securities you like.
Determine your objective and investment capital. Open a trading account of your choice and purchase the shares of your preference after making an analysis of the market.
The easiest way to purchase stocks in Canada is to select an online stock broking platform of your choice, choose an investment account, establish an account online, fund the trading account and start buying shares.
Webull is a U.S based stock broker which is also available for Canadian users. Canadian citizens can open an account with Webull.
Are you looking forward to buying an ETF in Canada? You simply have to open an account on the trading platform of your choice that offers ETFs and start investing.
To open a brokerage account in Canada, you’ll need to provide your full name and a valid form of a government-issued photo ID and some personal details such as your email address, phone number, residential address and Social Insurance Number (SIN).
There are various online brokerage platforms in Canada. We believe that Questrade, Scotia iTrade and CIBC investor's edge are the best alternatives to Wealthsimple.
No, Ally Invest is currently unavailable in Canada. Let's gather useful information on the history, presence and other details of investment platform Ally Invest.
Canadian citizens can easily purchase U.S stocks. Many online stock brokers provide the facility to invest in US stocks. Questrade and Interactive brokers are some of the brokers who allow foreign investing. Apart from this, there are some other ways to directly as well as indirectly invest in US stocks. One of the non-traditional methods includes the TFSA (Tax-Free Savings Account) with which you can buy up to $6,000 worth of stocks per year.
Yes, Scotiabank is good for new immigrants in Canada. They offer products and services designed especially for individuals and families that are new to Canada.
You can send money from Canada to India via Wire transfers, drawing a cheque or through remittance companies. Out of this remittance companies method is the quickest.
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Through an Indian Demat account, Canadian NRIs can benefit through the growth of different Indian sectors. As India is a developing country, chances of returns are much higher!