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Indian investors have upped their allocations to US technology stocks this year amid a rally in bellwether names.
Shares of Tesla, Meta Platforms and Nvidia have soared over 100 per cent this year. Shares of Amazon, Netflix and Apple are up 77 per cent, 66 per cent and 56 per cent, respectively. Microsoft and Alphabet have risen 55 per cent.
Investment in FAANGM (Facebook, Apple, Amazon, Netflix, Google, and Microsoft) shares through online investment platform Vested Finance has risen 35 per cent year-on-year to over $40 million. Investment in companies specialising in artificial intelligence and computer chips has jumped 46 per cent to about $10 million. This includes popular AI stocks such as Nvidia, TSMC, UiPath and ASML.
Indian investment in the accounts of Stockal, another platform for global investing that has a tie-up with several domestic brokerages, has seen a 50-60 per cent rise this year. Some of this money was initially parked in cash as a dollar hedge but started getting deployed in equities, predominantly technology stocks, in the second half of the year.
“In the middle of the year, 15 per cent of our customers’ assets were in cash and 10-15 per cent in technology stocks. Some of this cash has also made its way into technology stocks. We have seen customers’ portfolios go up 6-7 per cent in the last couple of months because of the tech rally,” said Sitashwa Srivastava, Co-founder, Stockal.
Favourite stock
Tesla continues to be a favourite for seasoned and new investors. About 35 per cent of active investment accounts on Vested hold Tesla shares. About 12 per cent of new investors in the US markets from India start by buying Tesla on Vested. According to Stockal, 8-9 per cent of its customers’ equity assets are always in Tesla because the shares have historically been volatile and offer ample opportunities to make money.
Although investments in exchange-traded funds (ETFs) are growing at a slower pace compared to individual stocks, certain ETFs are bucking the trend. Invesco Nasdaq 100 ETF (QQQM) and ProShares UltraPro Short QQQ ETF, for instance, have seen a 300 per cent spurt in investments this year, according to Vested.
MFs shine
Domestic mutual funds may have failed to capitalise entirely on the tech rally given the restrictions imposed by RBI on overseas investment. Nonetheless, the market value of MF holdings in FAANGM, Tesla and Nvidia has risen 45 per cent in the year to November to ₹19,357 crore. This is a 19x growth in the past five years.
Top schemes with holdings in these stocks include Parag Parikh Flexi Cap Fund (₹7,653 crore), Motilal Oswal Nasdaq ETF (₹3,044 crore) and SBI Focussed Equity Fund (₹2,209 crore).
“We are seeing a bit of herd mentality, with investors lapping up tech shares despite steep valuations. The belief seems to be that the stocks will continue to soar going into CY24,” said Srivastava.
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