The Indian stock market, represented by Nifty 50, has risen by nearly 13% (as of December 12, 2024). However, the U.S. market, particularly the NASDAQ index, has surged by approximately 33% over the same period.
While this does not imply abandoning Indian investments, diversifying into the U.S. market can be beneficial for two key reasons:
- Dollar Hedge: The Indian Rupee has consistently depreciated against the U.S. Dollar over the last decade, increasing returns for Indian investors in U.S. assets.
- Diversification: NASDAQ 100 has a low correlation (24.1%) with Nifty 50, making it a strong diversification tool.
Comparing Key Indices
| Index | Companies Covered | Growth in Last 10 Years |
| Nifty 50 | Top 50 Indian stocks | 200% |
| NASDAQ Composite | 2,500 U.S. companies | 360% |
| NASDAQ 100 | Top 100 U.S. tech-heavy stocks | 400% |
Sector Allocation: NASDAQ vs. Nifty 50
| Sector | NASDAQ 100 (%) | NASDAQ Composite (%) | Nifty 50 (%) |
| Technology | 59 | 60 | 13 |
| Consumer Discretionary | 18.3 | 17.7 | – |
| Financials | 0 | 3.4 | 34 |
| Energy | – | – | 10 |
Top Companies in NASDAQ 100
| Company | Allocation (%) |
| Apple | 9.0 |
| Microsoft | 8.0 |
| Nvidia | 7.6 |
| Amazon | 5.5 |
| Tesla | 3.8 |
Investment Options: India vs. U.S. ETFs
Investors looking to gain exposure to NASDAQ 100 can choose between:
- India-Based ETF: Motilal Oswal NASDAQ 100 ETF
- Traded on: Indian Stock Exchanges
- Expense Ratio: 0.58%
- 1-Year Return: 37.2% (vs. NASDAQ 100 return of 38.4%)
- Tracking Error: ~1% below NASDAQ 100 due to time zone differences and execution delays
- Liquidity: Moderate, ~500,000-1 million shares traded daily
- U.S.-Based ETF: Invesco QQQ Trust Series 1 (Ticker: QQQ)
- Traded on: U.S. Stock Exchanges
- Expense Ratio: 0.20%
- 1-Year Return: 37.2%
- Tracking Error: Minimal (~0.2%)
- Liquidity: High, ~23-32 million shares traded daily
Choosing Between Indian and U.S. ETFs
| Feature | Motilal Oswal NASDAQ 100 ETF | Invesco QQQ (QQQ) |
| Exchange | Indian NSE/BSE | U.S. NASDAQ |
| Expense Ratio | 0.58% | 0.20% |
| Tracking Error | 1% | 0.2% |
| Liquidity | Moderate | High |
| Ease of Investing | Easy | Requires U.S. brokerage account |
Key Takeaways
- Indian investors benefit from rupee depreciation when investing in U.S. ETFs.
- NASDAQ 100 offers high exposure to technology and consumer discretionary sectors.
- Invesco QQQ has lower expenses and tracking error compared to Indian ETFs but requires an international brokerage.
- Motilal Oswal NASDAQ 100 ETF is easier for Indian investors but may underperform slightly due to tracking error and higher costs.
When to Invest?
- The NASDAQ 100 P/E ratio is currently at 37.3, above its 10-year average (20-30 range). This suggests a potentially overvalued market.
- Investors should track valuations before entering and consider systematic investing (SIP) in ETFs for risk mitigation.
Disclaimer: This content is for educational purposes only and is not intended as financial or investment advice. Please consult a qualified financial professional before making any financial decisions.