Business growth is happening everywhere. Even if India is one of the fastest-growing economies in the world, there are lucrative stocks in other stock exchanges that can have delivered good returns. Apart from returns, another goal of investment is to diversify. Overseas markets have a lower correlation to the Indian market. When you invest in Indian stocks alone, your entire investment is exposed to any national-level risk, like RBI interest rate decisions, rupee valuation or national economic slowdown. International diversification mitigates this risk. Investment in developed economies also offers stability to your investment. These economies donʼt react sharply to downturns and are robust enough to recover, even when they do fall. All these reasons make overseas investment an effective portfolio diversifier.
1. Why is exposure to the overseas market important?