India is growing at an impressive pace, with a GDP growth rate of 8.2% in FY 2023-24, making
it the fastest-growing major economy in the world. Future projections also look strong, ranging
from 6.5% to 7.3% in the next few years. So, why think about overseas stocks when India is
doing so well? Here’s the deal.
Diversifying globally is all about managing risks. No matter how fast India’s economy grows,
markets can be unpredictable. Political events, inflation, or even local crises can create
turbulence. When that happens, having investments spread across other economies can act as
a safety net.
Another thing to think about is access to opportunities. India has some great companies, but
let’s be honest—there are industries and businesses that just don’t exist here. For example,
global tech giants, e-commerce platforms, and advanced renewable energy companies operate
on a scale far beyond Indian firms. Investing overseas opens the door to these kinds of growth
stories.
Currency is another factor. The rupee has historically depreciated against stronger currencies
like the US dollar. If you invest in US stocks, you don’t just benefit from the stock price
appreciation; you also gain from the rupee’s depreciation. Over 25 years, US investments have
delivered solid returns, boosted further by this currency effect.
Now, let’s talk about risk-adjusted returns. By combining Indian and international stocks, you’re
not just spreading risk — you’re also improving overall returns. A balanced portfolio with a 50:50
split between Indian and US equities has historically shown 50% better returns per unit of risk.
That’s a smart way to grow your wealth while staying protected.
During tough times, this diversification becomes even more critical. Take the 2008 financial
crisis, for instance. The Indian market fell by 52%, but the US market dropped only 37%.
Similarly, in the 2020 COVID crash, Indian markets dipped 29%, while US markets were down
20%. Having exposure to stable economies can help cushion the blow in such scenarios.
US markets, for example, are less volatile than Indian markets. If you’re looking to reduce
overall risk, adding some international stocks can help balance the ups and downs of a more
volatile domestic market.
Even businesses in India are going global. Outward foreign direct investment (FDI) from India
reached $3.24 billion in October 2024, up from $2.55 billion in the previous year. If Indian
companies are leveraging global opportunities, shouldn’t individual investors consider doing the
same?
Getting started isn’t complicated. You can use international feeder funds, invest directly through
brokerages with global tie-ups, or explore apps that make it easy to buy foreign stocks. There
are even portfolio management services for high-net-worth individuals looking for curated global
exposure
In short, India’s growth is exciting, but having a mix of international stocks adds stability, opens
up new opportunities, and helps you handle market surprises better. It’s not about choosing one
over the other — it’s about creating a balanced portfolio that works in any scenario.
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