US Elections 2024: Here’s how investors in India can profit from Donald Trump’s market momentum

Shares of Tesla, Donald Trump’s media company, and U.S.-focused small caps are on a climb, reflecting optimism amid Donald Trump’s show in the US Presidential elections.

Though key states had yet to finalize their results, Trump declared victory following Fox News’s projection that he had won against Democrat Kamala Harris. 

The former president’s media company, Trump Media & Technology Group, spiked 30%, tripling its value since its September lows and boosting Trump’s stake to $5 billion.

Tesla, where CEO Elon Musk has vocally supported Trump, climbed 11%. Musk is also being considered for a prominent government role, with Trump promising to make him head of a government efficiency commission if re-elected.

In response to the election outcome and Trump’s pro-domestic policies, the S&P 500 futures reached an all-time high, and futures tied to the Russell 2000, focused on small-cap U.S. companies, jumped 5.6%. 

Investors are betting that domestic firms will benefit from policies favoring U.S.-based production and incentives for American businesses.

Indian investors interested in U.S. equities, such as Tesla or Trump Media, can buy shares on U.S. exchanges by following certain procedures under the Liberalised Remittance Scheme (LRS).

1. LRS Route Requirements:
Under LRS, resident Indians can remit up to $250,000 annually per person for capital and current account transactions. Investors must adhere to specific guidelines, including tax compliance and documentation for remittance sources.

2. Tax Implications:
Investing in U.S. stocks involves two tax components. First, a Tax Collected at Source (TCS) of 20% applies if remittance exceeds Rs 7 lakh annually. Second, gains from U.S. equities are classified as capital gains, with a 24-month holding period required for long-term status. Short-term gains are taxed at individual rates, while long-term gains carry a 20% tax with indexation benefits.

3. Setting Up a Brokerage Account:
Investing in U.S. stocks requires opening an account with a brokerage offering access to U.S. markets. Local brokerage accounts typically don’t allow foreign trades, so investors should evaluate any fees involved, which may be significant for smaller trades.

This election-linked market rally presents a unique opportunity for Indian investors to diversify into high-growth U.S. stocks while navigating the regulatory and financial requirements.