How Can You Invest in the Nasdaq from India?

Nasdaq is one of the US exchanges that one can invest through from India

Investing overseas has now become an important component of diversifying your portfolio. Investing in US equities is gaining prominence among Indian investors. One such stock exchange in which you can make your investment is the Nasdaq.

What Is Nasdaq?

Do you know that Nasdaq was an acronym for the National Association of Securities Dealers Automated Quotations? We wouldn’t believe you if you said yes.

Nasdaq became the first electronic stock market in the world when it began operations in 1971. It now contains three indices. 

  • The Nasdaq Composite is the main one and is well known alongside the Dow Jones Industrial Average and the S&P 500. 
  • The Nasdaq 100 consists of the 100 largest non-financial companies listed on the index. The 100 companies in the Nasdaq 100 make up more than 90% of the weight of the Nasdaq Composite Index. 
  • The Nasdaq Financial-100 consists of the financial companies that are listed on the Nasdaq.

How are the Nasdaq and NYSE Different?

A lot of you may think that the New York Stock Exchange (NYSE) and the Nasdaq are similar. However, that isn’t the case. The NYSE is the oldest exchange in the US and is the largest equities-based exchange in the world. Both exchanges differ from each other on the following parameters:

  1. Location: Most exchanges have abandoned the concept of the trading floor, and now trade digitally. However, the NYSE still retains a physical trading floor on Wall Street. A large part of the trade also comes from its New Jersey-based data center. On the other hand, Nasdaq does not have a physical trading floor. It has been trading electronically ever since its inception.
  2. Dealings: The way securities are traded is the biggest difference between the two exchanges. NYSE is an auction-based market. This means that buyers and sellers enter competitive bids at the same time. The current stock price is a reflection of the highest price a buyer is willing to pay and the lowest a seller is willing to accept.
    On the other hand, Nasdaq is a dealer-based market. Here, multiple dealers post prices at which they will buy or sell a specific stock. The dealer here is the market-maker for Nasdaq, someone that actively buys and sells stocks on behalf of the traders.
  3. Functioning: Traffic controllers determine the functioning of both these markets. In general, traffic controllers connect buyers and sellers, but their roles in the Nasdaq and NYSE are different. As mentioned above, the traffic controller at the Nasdaq, known as a market maker, actively buys and sells stocks on behalf of traders.
    At the NYSE, the traffic controller is a specialist. He is responsible for setting the opening price for stocks, accepting limit orders, and moderating interest for particular stocks.

What Kind Of Stocks Can List On The Nasdaq?

The Nasdaq is a tech-heavy index – an index consisting mainly of technology stocks. However, not all stocks can list on that index. In order to list on the Nasdaq composite:

  • a stock must exclusively list on the Nasdaq market
  • the stock must be common stock of an individual company. Preferred stock, ETFs, etc,  are thus excluded
  • ADRs, REITs, and shares of limited partnerships can be listed.

As of April 2021, there were 3,097 Nasdaq-listed securities. Here are the top 10 Nasdaq-listed stocks by market cap:

Nasdaq Top 10 Stocks

How Do I Invest in Nasdaq?

From India, there are two main ways to invest in the Nasdaq

  1. Mutual funds and ETFs listed in India: If you are only interested in investing in the broad Nasdaq market, you can invest through mutual funds and ETFs listed in India. These funds invest in the Nasdaq-listed companies and charge a management fee for that. For serious investors, it offers low flexibility. The high fees, low liquidity, and tracking errors also cause domestic funds to underperform the US-listed ETFs substantially. 
  2. Direct investing in US stocks: You can invest in US stocks and ETFs directly through a broker. At Winvesta, you not only get an option to trade in a whole host of securities listed on the Nasdaq (and NYSE) but appropriate regulatory protections as well. You can download the app and start investing in the Nasdaq from India as soon as today. 

If you do not have the luxury of time to research and select stocks, ETFs are the easiest way to invest in the Nasdaq. One of the most popular Nasdaq ETFs on Winvesta is the QQQ ETF that tracks the Nasdaq-100 index.

If you wish to know more about how to invest in the Nasdaq and other non-Nasdaq securities, you can take a look at our recent blog post How to Invest and Buy US Stocks from India.

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*Capital is at risk

All content provided by Winvesta India Technologies Ltd. is for informational and educational purposes only and is not meant to represent trade or investment recommendations. Remember capital is at risk. Terms & Conditions apply. 

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