Planning to invest in Meta, SpaceX or Nvidia? 3 risks Indian investors must know before buying US stocks

India's benchmark Nifty 50 has fallen nearly 12% this year, making it one of Asia’s worst-performing stock indices. The decline has prompted retail investors to look beyond domestic markets for opportunities, particularly in the US, South Korea and Taiwan, which offer exposure to the booming AI sector.

Several regulatory channels are available to Indian residents looking to invest in international stocks. Access to overseas markets, including the United States, has become easier through the Reserve Bank of India’s (RBI) Liberalised Remittance Scheme (LRS) and investment platforms operating through GIFT City.

Though US has the world's largest stock market that hosts some of the biggest companies, including Amazon, Meta, SpaceX, Tesla, Microsoft and more, investing in US stocks comes with several risks that Indian investors should be aware of.

When you are investing in US stocks, you will have to deal with two currencies: the Indian rupee and the US dollar. In this case, you must first remit money from your Indian bank account and convert the amount from INR to USD before buying shares of a certain US-listed company.

Similarly, when you sell your shares, the proceeds will be received in US dollars. You will then have to convert the amount back into Indian rupee before it is credited to your Indian bank account.

This exposes your US investments to currency fluctuations.

For example, if you buy 10 Google shares at $240 apiece when the exchange rate is ₹95 per dollar, your total investment is ₹2,28,000. If the share price rises to $280 and the rupee appreciates to ₹90 per dollar, your investment will be worth ₹2,52,000 when you sell.

This translates into a gain of ₹24,000 (10.5%), compared with a 16.67% gain in dollar terms, indicating that the rupee's appreciation has reduced your overall returns. However the actual returns can vary due to taxes on foreign stock investments and brokerage charges.

While the US stock market is the largest in the world, not every listed stock enjoys high trading volumes. Some stocks, particularly those of smaller or lesser-known companies, may have limited buyers and sellers.

Investors may therefore find it difficult to sell their holdings at the desired price or exit their positions quickly. In some cases, low demand can force investors to sell at a significant discount or hold on to shares longer than intended.

To manage this risk, investors should monitor the trading volumes of their holdings and stay updated on company specific developments that could affect investor interest in the stock.

The US government has different reporting and tax regulations when it comes to the stock markets. Like in India, certain sectors in the United States are also governed by regulatory bodies.

Any changes made by the US regulators can impact all companies in a particular sector and cause share prices to rise or fall. As an Indian investor, you need to stay updated with these policy changes.

Unlike dividends, capital gains from selling US stocks are generally not subject to US withholding tax for Indian residents, though these gains are taxable in India.

If you sell US shares within 24 months of purchase, the gains are added to your total income and taxed at your applicable slab rate in India. If you hold US shares for more than 24 months, the gains are taxed at 12.5% (without indexation benefits), plus applicable surcharge and cess.

Eshita Gain is a digital journalist at Mint, where she joined in May 2025. She writes on corporate developments, personal finance, markets, and business trends, with a focus on delivering timely and relevant stories to a broad audience. <br><br> While her core beat lies in business and finance, she is not confined to a single niche and frequently explores stories across domains, including international relations and policy developments. <br><br> She holds a postgraduate diploma in business and financial journalism by Bloomberg from the Asian College of Journalism (ACJ), Chennai. During her time there, she received rigorous training in tracking financial data, interpreting corporate filings, and reporting on business developments. She has pursued her graduation from St. Joseph’s University, Bengaluru in a multi-disciplinary course. Her majors included Journalism, International Relations, peace and conflict studies. <br><br> Eshita has previously worked in digital marketing, which enables her to write SEO friendly copies that are clear and engaging. <br><br> Her primary interest lies in breaking down complex subjects and writing clear, accessible copies that inform readers. She aims to bridge the gap between technical financial language and everyday understanding. Outside the newsroom, Eshita enjoys reading non-fiction, and exploring new places, constantly seeking fresh perspectives and stories beyond headlines.

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