So you thought only the Tatas can buy Corus shares sitting in India? Think again. Quietly but surely, small town Indians have got on to trading in global stock exchanges, thanks to new overseas investment policies that are beginning to show effect.
While promoters and large corporations are busy making plans for overseas acquisitions, technology-savvy Indian investors have started shopping for assets across the globe, sitting in comfortable corners in front of personal computers. On their list are not only equity shares but also positions in commodities and derivatives.
Early participants in what is considered a test phase have come from corners of states like Gujarat, Maharashtra, Andhra Pradesha and Karnataka.
When Ratan Tata, sitting in Mumbai, was engaged in hectic negotiations and confabulations to acquire Anglo Dutch steel maker Corus, Sanjib Biswas, sitting in West Bengal's tea trading town of Siliguri, was making a fast buck playing Corus stocks on London Stock Exchange.
Biswas has made $800 on an investment of around $2,000 from an upswing in Corus shares over two months. While domestic investors were losing money on Tata Steel, he was gaining on Corus.
Biswas is not alone. Around 1,000 such investors are engaged in buying foreign assets. Though it is not widely known or practised, Reserve Bank of India regulations allow Indians to invest overseas in equity, bonds, mutual funds, currencies and real estate. In 2004, RBI had permitted Indians to invest up to $25,000 every calendar year. This was increased in October 2006 to $50,000 for each financial year.
Biswas gets his trading account from Reliance Money, the distribution arm of Reliance Capital,which has tied up with the UK-based CMC, a leading player in online derivatives trading with a presence in 18 global markets.
"Reliance Money, in its test phase, is witnessing a significant enrollment of upcoming educated individuals who are ready benefit from the opportunities in global markets. We see this trend picking up with an increased level of awareness and knowledge as we go forward,” said Sudip Bandhopadhaya, CEO of Reliance Money.
Similarly, Kotak Mahindra’s securities arm has tied up with Man Financial to provide similar facilities in commodities trading. ICICI Securities is expected to announce such facilities shortly, industry sources said.
Investors need to register with a local broker and submit a set of documents, which are passed on to overseas partners. After the customer's credentials are verified, the customer must remit a minimum amount, which in CMC's case is $500.
CMC provides trading facilities in 3800 financial contracts, which include more than 3500 stocks like Corus. Besides stocks, investors can also buy or sell derivative instruments such as the Dow Jones index, Hang Sang Index and Brent Crude.