India shining for NRIs | NRI investments in India

The sharp fall in the rupee and steep correction in the Indian equity market present NRIs with a big investment opportunity.. […]

The falling value of the rupee against the US dollar and other major global currencies has been a major cause of concern for importers, international travellers, Indians studying abroad and patients seeking treatment overseas. But for non-resident Indians (NRIs), it has meant a bonanza as they can get greater value for their foreign currency when converting to the rupee. For instance, as on October 23, when each USD was equivalent to Rs 73.78, an NRI wishing to convert $10,000 into rupees would have profited approximately Rs 1.01 lakh more than on January 1, when a dollar was fetching Rs 63.67. The fall in the rupee has now been considerably arrested and a tumble looks less likely in the near future. So it makes sense for NRIs to consider converting some of their foreign exchange savings into INR if the funds are intended for use in India.

The rupee's fall has coincided with the correction in the equity market. The Sensex has seen a steep fall from its peak of 38,897 points on August 28 to 33,847 points on October 23-a drop of almost 13 per cent. Post this correction, many stocks are trading at very attractive prices. In a growing economy like India, whose long-term growth potential is largely intact, equities are expected to deliver higher returns in the long run. "For NRIs focused on the long-term potential of India, this is a great time to invest," says Satyen Kothari, founder and CEO, Cube Wealth. "The fall in the Indian currency and the drop in the stock market make it a double win."

Many investors, however, would be apprehensive if the market correction is over. "While no one can accurately predict which way the currency will go, if there is belief in the India [story], then at least the long term view on the stock market needs to be bullish," says Kothari. "Long term means at least five years, and ideally 10 years." As an NRI, if you have end use for your funds in India and have a long-term investment horizon, you can use this opportunity to invest in Indian equities. However, if you are not investment-savvy, it would be better to get professional advice before investing directly in equities, say experts.

A further correction in the rupee cannot be completely ruled out as various factors, such as rising crude oil prices, trade wars and rising current account deficit, have not subsided. Though the opportunity may look tempting for many NRIs to convert a major chunk of their savings into INR at one go, experts recommend a staggered approach. Similarly, further correction in the equity market remains a possibility. So go for staggered investment over 6-12 months in several tranches. By converting and investing in a staggered manner, you can average out the cost and minimise the risk of timing the market. "NRIs can invest through SIPs (systematic investment plans) as well as STPs (systematic transfer plans) in Indian equity mutual funds as well as stocks," says Tarun Birani, founder and CEO, TBNG Capital Advisors. "The various online platforms available can help in getting the same executed seamlessly."

DOUBLE BONANZA

• The USD is fetching 7.5 per cent more than its August 1, 2018 value
• The Sensex has fallen by almost 13 per cent from its August 28 peak
• Good opportunity for NRIs to convert their forex or invest in Indian equities
• Convert forex in a staggered manner, 30-40 per cent to start with, say experts. Further conversions, if any, should be done over 6-12 months
• NRIs looking to invest in Indian equities should take the SIP route

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