Investing in the Indian Stock Markets

Investing in the Indian Stock Market, Information for NRI's Demat, PIS investing accounts in India..[…]

Today India and China are two countries that are very much in the news as two of the world’s fastest growing economies. The Indian stock market is booming and has attracted the attention of fund managers all over the world.

Investing in the stock market by Indians has in the past few years become popular. Stock brokers are now common all over India. Many middle class families after hearing and reading get rich stories associated with the stock market want a piece of the action and have started to invest in the stock market. Most new issues of stocks, even of new companies just going public are often oversubscribed.

India’s first stock exchange was established in 1875 in Bombay. The Bombay stock Exchange is now called the Mumbai Stock Exchange. As Mumbai is considered the financial capital of India. The Mumbai stock exchange is the most popular stock exchange in India.

India's Flourishing Economy

While many think that India’s economy is booming today because of outsourcing and call centers. Manufacturing and research sectors are also adding to India’s economic wellbeing. Present day India is also in a slow down due to the trickle down affect of the western economies and depression like environment and media hype all over North America.

Economists world wide don't expect much improvement in several western countries. Europe, as we move into 2012 is facing economic problems, for the United States, 2012 is the election year, while there is a slight movement and a speck of hope that the economy might get better in the future, things are still slow and job losses still continue to occur in many fields. I doubt if the US economy will show much improvement during this year. Manufacturing is the engine that is a necessary to create jobs and this is not appear to be happening in the United States for quite some time.

Investment is flowing into India because of liberal rules of the Government of India. Talk about a economic growth today and India and China are the two countries that comes to mind. India being a democracy and for many investors this is a plus point for India. If India had opened its market to foreign investment earlier quite a bit of foreign investment that ended up in China would have perhaps been invested in India.

The Indian government has also finally taken note of the poor state of infrastructure. Some progress is now being made in Highway improvement, power sectors as well as telecommunications. Improved infrastructure will certainly add to India’s economic growth and wellbeing in the years to come.

Investing in India's Stock Market

Laws have now changed in India and allow foreigners to invest in the Indian stock market. In some specific industries foreigners can even hold up to 100 per cent of shares.

Many Non Resident Indian’s (NRIs) are today investing or contemplating to purchase stock in the Indian stock market. Many Indian companies have been posting record profits and some paying out high dividends. Regulations today make it easier for foreign residents to buy stocks on the Indian stock exchanges.

Is the Indian stock market a good market to invest in? News reports of enormous profits made by people are quite common in India. However news reports of stock market manipulation are also more common in India. The Indian stock markets regulatory agency is called the Securities and Exchange Board of India (SEBI). The offices of SEBI are located in Mumbai.

Over the last few years SEBI has taken to task several companies and groups of people and charged them with stock manipulation offenses.

Stock purchases in the Indian stock market can be quite rewarding if purchases are made after proper research and sound advice from reputed stock advisors or business consultants.

There are some excellent companies in India that have generated immense profits for their shareholders. As with any other stock markets worldwide, careful research is required before buying stocks in India.

When investing in the Indian stock market, I would stay away from what are known as penny stocks. Unless a company has built a reputation I would not buy their stock, especially new companies who do not have enough information available for the public. Research a company before investing in it.

Demat Account for Non-Residents (NRI’s)

The first step to invest in the Indian markets is to open a demat account. NRIs do not require permission from the Reserve Bank of India (RBI) to open a demat account. NRIs, who wish to buy shares from the secondary market, are required to open a PIS account with a bank of their choice.

PIS account refers to Portfolio Investment Scheme (PIS) and allows NRIs to invest in shares of Indian companies.

Pan Card Requirement

NRIs who wish to invest in the Indian stock markets, will require in addition to a demat account is a Pan Card.

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