Nasdaq 100 is the basket of the top 100 non-financial companies listed on the Nasdaq stock exchange. It includes some of the biggest names in technology, consumer goods and services, healthcare, industrials, and beyond that are listed in the US stock market. This index gives investors a broad view of how these companies perform daily and provides valuable insight into these sectors.
Nasdaq 100 closed 2021 with over 20% gains. But recent market volatility has caused a correction in the Nasdaq 100. As of May 2022, the Nasdaq index was down 22.54% and year-to-date, the index has lost over 30%. This means prices have dropped significantly from their peak levels. While the Nasdaq 100 correction might sound like bad news, it presents an excellent entry point for Indian investors. Let’s take a look at the reasons for it.
- Exposure to high-growth large-cap companies
The Nasdaq 100 correction is a great opportunity for Indians to gain exposure to one of the world’s preeminent large-cap non-financial indices without having to pay high prices. It provides access to some of the world’s biggest companies, such as Apple, Microsoft, Amazon, Tesla, and Alphabet. All these companies are part of the Nasdaq 100 index and have seen their share prices decline significantly over the past few months due to market correction.
Despite losing more than 30% as of October 2022, historical data shows that following such corrections, there is usually a strong rebound over time from the market bottom. This makes it an ideal time for Indian investors to enter or increase their position in Nasdaq 100 index funds and leverage long-term growth potential in US stocks.
- Maximise gains on technological advances
With Nasdaq 100 correction, Indian investors can get a grip on significant technology sectors such as robotics, cloud computing, Big Data, 5G technology and green economy. The index also includes many companies that have filed patents for advanced and cutting-edge technologies. This serves as an opportunity for investors to invest in innovative products, which may result in high growth and revenue due to the potential demand spikes generated by emerging technology advancements.
How to invest in Nasdaq 100?
It is possible to invest in mutual funds that particularly focus on the Nasdaq 100 index. Depending on their financial standing, investors can go for a lump sum investment (one-time large investment) or set up a Systematic Investment Plan (SIP) for regular investments. Either way, it makes for an ideal opportunity to participate in global markets with less time and effort involved than traditional stock trading. There are also ETFs (exchange-traded funds) that track the Nasdaq 100.
A simple approach for Indian investors to invest in the Nasdaq 100 index is to install a mutual fund investment app and start investing in Nasdaq funds after evaluating the fund’s performance, returns expectations, and the risk level.
One can do this by opening an overseas trading account through any domestic broker that has tie-ups with US stockbrokers. The broker will execute trades on the investor’s behalf.
Alternatively, investors can also open a trading account overseas with a foreign broker, but this is often more complicated and expensive than using a domestic broker as there may be a risk of high currency conversion charges, brokerage fees, and minimum balance requirements.
Nasdaq is the world’s second largest stock exchange, with over 3,000 companies listing their shares. So, for Indians, the Nasdaq 100 correction presents an attractive opportunity to enter into or add to positions in global technology companies that have the potential to redefine their industries.
When considering investments during market corrections, it is important for investors to take a long-term view and consider their goals and tolerance for risk. Also, when considering a broker for investing in the Nasdaq 100 index, make sure to find one with a good track record and relevant experience to make informed international investments.