Invest in India: You can invest in India through the mutual funds or investing directly through the stock exchanges. The major difference between the stock markets and the mutual funds is that the latter offer flexible options for investing in various sectors of the economy like the stock exchange sector. Institutional investors buy shares as they have high confidence on the future price movements of a particular company. On the other hand, stock markets are open only during the trading hours. Even if the company is not having any good news for the past few months, the market will still be open due to the large number of investors.
When compared to the stock markets of developed countries, investing in India has its own share of advantages. It offers a number of options for both the investors and the institutional investors. The investors can easily buy shares from the market via the stock exchanges. Since these stock exchanges are operated by the SEBI, or the Securities Exchange Board of India, the investors will have full access to the market information. They also enjoy trading privileges at much lower rates.
The SEBI regulates all the stock exchanges in India and makes necessary amendments whenever required. The SEBI also offers advice to the investors on any matter regarding investments. The SEBI approves the proposals of the investors before these proposals are put forward for final approval. Most of the stock exchanges in India are completely free to visit and buy shares, but the Bombay stock exchange is more complicated with several different stock exchanges within it. Investors will need to visit all the stock exchanges in India separately to select their preferred exchanges.
There are several ways to invest in India through the stock exchanges. One of the popular methods is through the purchase of mutual funds. Mutual funds are groups of investments that are managed by a professional manager. Unlike the individual investors, the institutional investors are restricted by the rules of SEBI and cannot create their own sub-accounts. Even the SEBI has specified the various types of mutual funds and they are divided into two categories as per their nature, i.e., General Ledger Sub-accounts and Specialized Sub-accounts.
General Ledger Sub-accounts are the accounts that are primarily planned for meeting the domestic objectives, with the inclusion of some foreign portfolio investment. The major feature of such accounts is that they are basically designed for meeting the domestic objectives without the inclusion of any foreign portfolio investment. The FDI in Indian markets can be broadly categorized into direct investment fund products and indirect investment fund products. The direct investment fund products include foreign stocks bought through brokers or through agents who act as representatives of the foreign investor. On the other hand, the indirect investment fund products include investment instruments like bonds, equity securities, foreign currency deposits, derivatives, life insurance and other structured settlements.
The other options include exchange traded funds (ETFs), portfolio investment products and certificate of deposit (CD) accounts. An ETF is usually a security in its own right. This means that it is a kind of stock exchange product where investors can buy and sell shares of the underlying companies at an agreed upon price. An ETF can be traded individually and is generally available at a fixed price. Similarly, a CD is a type of portfolio investment where investors can borrow a sum of money on a secured basis and make periodic payments according to their agreements.
Mutual funds are the other options available for those looking to invest in India. Mutual funds are groups of financial investments, where investors pool their money to invest in various different kinds of common stocks and bonds. Apart from mutual funds, there are various other options like gold funds, equity funds, commodity funds and specialty stocks available for the investing community. The variety and number of investment options available for the Indian investors are largely due to the presence of foreign institutional investors.
An interesting fact about Indian portfolio investment is the availability of both funds and individual securities from abroad. There is a high influx of funds from the Middle East and Saudi Arabia into India. Many middle eastern oil producing nations like Iraq, Iran and Nigeria are purchasing Indian oil as the prices are very attractive and can be obtained at a relatively lower price. The large volumes of his transactions are also being made by a particular firm in India.