Indian investors are being urged to add overseas stocks to their portfolios as a hedge against a weakening rupee and high taxes.
Why Global Diversification Matters
Even though India is the fastest‑growing large economy, the rupee has tended to lose about 40% of its value every ten years. Over time this cuts the real buying power of earnings, especially when almost half of income goes to taxes.
Currency Depreciation Erodes Purchasing Power
When the rupee falls, a dollar earned abroad can buy far more in India than a rupee earned at home. Experts say an Indian saver may end up with only 30 cents of every dollar for goals like overseas education or retirement.
Splitting Between Nifty 50 and S&P 500 Can Help
- A 50‑50 mix of India’s Nifty 50 and the US S&P 500 has historically given higher returns with lower volatility than a portfolio that stays only in Indian stocks.
- This “free lunch” is made easier by recent government moves, such as lower capital‑gains tax on foreign assets and the operational launch of the GIFT City platform for offshore investing.
Domestic Growth Remains Strong
India’s real GDP is expected to grow between 6% and 6.5% this year. Public capital spending is up 30% year‑on‑year, inflation is around 4%, and companies are showing healthier balance sheets with low debt and strong earnings coverage.
Key Sectors to Watch
- Financial services
- Consumer consumption
- Technology
- Healthcare
Takeaway
Adding a portion of global equities can protect long‑term goals from currency loss while India’s own economy continues to expand. Investors should consider the mix that fits their risk profile and time horizon.
Remember, this is just my view, not a prediction. Do your own research before making any investment decisions.