Can Indians on a visa buy stocks in US?

I get this question from time to time, but I never did a post on this because there is a lot of conflicting information about who can do what with respect to the different visa types out there.

I hope to start a discussion with the information I have and then hope that people will share their experience on comments, and we can learn from each other’s experience.

Work Visas like H1B, L1A or L1B

If you have a H1B, L1B or L1A visa which allows you to work then you can definitely open a trading account and buy and sell shares in the US.

At the end of the year, when you’re filing your tax returns, you will have to include your earnings from your investing activities and pay taxes on them.

At the time of opening the account they will ask for your SSN, and you should already have that if you have been working in the US.

Tourist or Business Visa B1 / B2

As far as I know, if you have a business or a tourist visa, you can’t trade in stocks in the US. You won’t have a SSN in this case, and the brokerage won’t open your account without that. Additionally, you will not file your tax returns in the US at the end of the year, so I think that also points towards not being able to trade or buy shares.

If anyone knows differently, or has a different experience, please leave a comment.

Student Visa like F1

There are a lot of conflicting posts online about whether or not F1 visa holders can own stocks, and I am not sure about this one. Students on F1 Visa can get a SSN number, so they should be able to open an account, and the common theme in the posts I read is that F1 students can generate passive income and if that’s the case then they should be able to own stocks as well, but I didn’t read anything that answers this definitively.

In general, the advice that is often repeated is that if you’re in doubt then you better stay away from doing it as it may later impact your green card processing, and in that context it is better to play safe right now than repent later.

Reason for Difference in Moneycontrol Mutual Fund Numbers

I wrote about how the mutual fund return numbers from Moneycontrol were a bit different from those of Value Research and Morningstar yesterday, and that I wasn’t sure why that’s the case.

Invest Mutual who had helped with the post yesterday, researched some more and found that it was just because of different dates. He looked at the 1 year returns and found that and then I fiddled a little bit with moving a day back or a day forward and found that the difference of a day or two has caused this variance between the two sites.

Here is the table that shows the data.

Moneycontrol ValueResearch
1 year October 25 2011 October 28 2011
Historic NAV 12.8103 13.0741
Latest NAV 10/26/2012 15.6493 15.6493
Gain 22.16% 19.70%
3 year October 27 2011 (Tuesday) October 26 2011(Monday)
Historic NAV 11.4648 11.8601
Latest NAV 10/26/2012 (Friday) 15.6493 15.6493
Absolute Gain 36.50% 31.95%
Annualized 10.93% 9.68%
5 year October 25 2007 (Monday) October 26 2007 (Friday)
Historic NAV 13.893 13.7028
Latest NAV 10/26/2012 (Friday) 15.6493 15.6493
Absolute Gain 12.64% 14.21%
Annualized 2.41% 2.69%

Once again, thanks a lot to Invest Mutual for their help, this is not the first time, and I certainly recommend that you follow him on Twitter.

Variation in mutual fund return numbers

Austere posted a comment a few days ago which spoke about mutual fund returns being different for the same fund in different websites, and even within the same website.

Here is the comment:

austere October 15, 2012 at 6:10 pm [edit]

I’m confused, can you help?
was reviewing mf’s, and noticed a perplexing thing–take a fund, in this instance Franklin India Smaller Companies Fund.
Going by the Moneycontrol portfolio returns for 5/3/2 yrs are 14%, 33%, -5%
But if you do a fund search on Moneycontrol, returns for 5/3/2 years are 2.7, 9.9,-2.5
Morningstar has a totally different set of numbers 20, 10 and 3%.
Wondering which set of numbers to go by. The fund factsheet on the FT site has only yearwise return!

Sorabh, who is probably one of the most polite commenters I’ve seen here has answered one part of this question in fairly good detail, and I must admit I’m going to repeat a lot of what he said, and then present one difference that I haven’t been able to reconcile.

Annualized versus Absolute Returns

First, let’s take a look at the seemingly different numbers from the same website on the same mutual fund because that’s easier to clarify.

The Moneycontrol page on Franklin India Smaller Companies fund has two sets of numbers, one for absolute returns and one for annualized returns. I would imagine that the portfolio contains the absolute number too since that’s the one you are interested in when reviewing your portfolio.

In this case the absolute return for the last 3 years has been 36.5% and the annualized return has been 10.9%, and this just shows that if you reinvest your money at 10.9% for 3 years, you will get an absolute return of 36.5%. So within a website, there shouldn’t be a difference on the return numbers and there isn’t.

Differences between two websites

But between two websites, there are differences, and we will take the example of the growth option of the same fund on Moneycontrol, Value Research and Morningstar to see if these sites come up with the same returns.

Here is a table that shows the comparison.

MF Returns Comparison
MF Returns Comparison

As you can see, the returns for Value Research and Morningstar are identical, but the Moneycontrol number varies. If I look at the Franklin India page itself which has the absolute numbers for calendar years, those numbers match the return from the Value Research and Morningstar number but not the Moneycontrol numbers.

I have been looking to see why this difference exists but I haven’t found a reason yet. The four or five funds I looked at all showed the same result, so this isn’t a quirk in this mutual fund, but rather a real difference in the way Moneycontrol calculates returns.

If anyone knows how to explain the difference please leave a comment. In the meantime, I looked up the NAV on the Franklin Templeton website for this fund for these dates, and saw that if you calculate the returns based on these NAVs then those would match the ones shown by Value Research and Morningstar so my inclination is to look at these websites for any NAV comparisons.

However, I do feel that this difference is not because Moneycontrol is calculating incorrect results, but because they are calculating it in a different manner, so if you are comparing two mutual fund returns, and using Moneycontrol for both the funds then you should be fine, just don’t use data from two different websites.

Thanks to Austere for asking this question because I never knew about this difference before today, and thanks to Invest Mutual who answered a lot of my questions on Twitter and helped develop this post.

Of retirements, passwords and 3D printing labs

Let’s start this week with a very different type of retirement article which was published in the WSJ last week. This is an article about a couple who have sold their house and most other possessions in California, and no longer have a permanent home. They live in different countries for short periods of time, and I think it is a fascinating way to spend your retirement years.

Next, Wired has this great article about how everything you’ve been told about passwords is wrong, and I’ve come across this concept a few months ago and have partially adopted this way of keeping memorizing passwords myself.

Ajay Shah has a very interesting post on how the young are getting away from agriculture and what it could mean for the economy.

Kiran has yet another post on special situations investing, and more than the situation itself, I’m linking to it to highlight the thought process that is involved in analyzing such a situation.

It is perhaps not surprising that the US army has 3D printing labs that are setup in remote locations and can rapidly equip bases with parts and gear.

The Financial Literates has an excellent infographic on the cost of higher education.

Finally, don’t forget to avail your Eid and Diwali discounts when you pay a bribe this festive season.

Enjoy your weekend!

Goldman Sachs India Equity Fund NFO

Goldman Sachs is coming out with a new mutual fund called the Goldman Sachs India Equity Fund, and the NFO (New Fund Offer) for this scheme starts on October 17th 2012, and ends on October 31st 2012.

This is an actively managed equity mutual fund which means that this fund will primarily invest in shares, and the fund manager will choose which shares they should invest in to beat the market.

The SID (Scheme Information Document) states that stock picking will not be limited by any sectors or market capitalization, and they will use a bottom up approach to stock picking. So essentially, they can choose from any listed stock if it appeals to them.

From what I understand, the section of expenses doesn’t say how much they will charge; just that they can charge the maximum permissible by SEBI. If anyone has a different interpretation, please leave a comment.

For me, the most interesting thing about this fund is that Goldman Sachs has decided to bring out an actively managed fund after buying Benchmark Assets which was a company that was known for its wide range of low cost index funds. It looks like GS thinks that there is more growth potential in actively managed funds than index funds in India, and this may remind you of the post and discussion around why index funds don’t do well in India that was published here some time ago.

As far as investing in this or any other NFO is concerned, I’ve written several times that there are no benefits of investing in a NFO, and it’s a lot better to wait and see how a fund performs than to jump in from day one. Perhaps, the only exception to this is when you have a fund that offers exposure to an asset that’s not currently available, but that’s clearly not the case with the GS India Equity Fund; there are plenty of good performing active mutual funds that are available to investors already.

How to find the promoter pledge number for a share?

I wrote about promoter pledges being a red flag yesterday and I wanted to do a quick post on how to find this information for a particular stock today.

The first step is to go to the NSE website as that’s the place where you can easily find this information on any listed stock in India. Type in the name of the company in the “Get Quote” text box near the upper middle part of the screen and hit “Get Quote”.

In the resulting page, click on “Company Information” which is the second tab towards the center of the screen. This will open up a section that shows the following 4 blocks of information:

  1. Corporate Announcements
  2. Financial Result / Shareholding Pattern
  3. Board Meetings
  4. Corporate Actions

You are interested in “Shareholding Pattern”, click on that section. This will show you categories of shareholders and how much percentage they hold. Towards the end of this section, you will see a hyperlink labeled “View Details >”.

Click on this link and you will see a big list appearing on a new screen. Click on the first line and this will open a pop up window. You will see “Main Shareholding” as one of the hyperlinks on this popup and when you click that – a new screen will appear that shows you results of which category owns how much and what percentage of their shares are pledged.

This information used to be accessible a lot easier in the older version of the NSE website, but I don’t know why they changed the format to make it so hard to reach. I can add screenshots to this post if people are finding it difficult to follow the post but right now I’m in a bit of a hurry so just writing the post. Please leave a comment with any questions, or if you know of a better way to get this information.

Promoter Pledges: A Red Flag For Investing in a Share

On Monday I wrote about debt recast, and one the two companies mentioned in the original comment requesting the post was Suzlon which reminded me of another post I had done more than one and a half years ago.

That post was about three things you should look at if you want to analyze individual companies, and share pledges was one of the three factors.

Promoters have to declare if they have pledged their shares and borrowed money against it, and this information is publicly available. This is a good thing to keep track of because you’d imagine that for a promoter, their shares are the last thing they want to borrow money against.

The way borrowing against shares works is that if you have shares worth Rs. 1,000, a lender may give you 30% of that value, and you have to maintain that margin which means if the shares fall in value then you have to either pledge more of them or come up with more money. If you fail to do that then you can even lose control of your company because the lender will seize your shares, and that’s a terrible situation to be in.

That’s why I consider a high promoter pledge a red flag, and if you combine that with low promoter stakes in the company then to me, that’s an even bigger red flag.

I did a list of shares with promoter pledges back in 2009 and Suzlon features there along with around 400 other companies. Suzlon is there with about 25% which is a high number and their share price today which has gone down about 50% in the last year which given the broader market is a fairly bad performance.

One factor alone doesn’t give you a conclusive answer on whether or not you should invest in a company, but if you want to invest in stocks then promoter pledges is certainly an important factor to keep in mind.

Interest Payment Dates of Infrastructure Bonds Issued in 2011-12

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at
Tax Saving Infrastructure Bonds u/s 80CCF were in high demand last year. As many as twelve infrastructure bond issues came for subscription and many of the investors just kept seeking more information about their investments.

Now the investments are about to complete their first year and many of the investors are now wondering when they will receive the first interest payments and whom to contact in case they do not get it by the due date.

Vivek suggested the other day to write a post carrying the interest payment dates of infrastructure bonds, the same way we had it for the Tax-Free Bonds issued last financial year.

Author: vivek
Can you please publish the various interest payment dates for various 80CCF bonds the way you have published for the Tax savings bonds? That way it would be helpful for all of us who have purchased these bonds.

Here is the table carrying the same for all of the infrastructure bonds issued last financial year, in the chronological order of their issue opening dates.

Issue Interest Payment Date Registrar Contact Email


December 12




November 21


040-2342 0815-20

IDFC Tranche 1

December 30


040-2342 0815-20

L&T Tranche 1

January 10


022-6772 0300/400

IFCI Series IV

February 15


040-2342 0815-20


February 15




March 15


040-2342 0815-20


March 22

Link InTime


L&T Tranche 2

March 25


022-6772 0300/400

IDFC Tranche 2

March 21


040-2342 0815-20

IFCI Series V

March 31


040-2342 0815-20

IDFC Tranche 3

March 31


040-2342 0815-20

Infra Bonds in Demat Account – If you had taken these Infra Bonds in your demat account, then the company will credit the interest payment directly in your bank account which is presently linked to your demat account.

Infra Bonds in Physical Form – If you had taken these bonds in the physical form, then you must have given a cancelled cheque of your bank account along with your PAN card copy and the address proof. The company will credit the interest payment directly in the same bank account of which you gave the cancelled cheque.

If you have any query regarding any of your interest payment related issues, you can contact the respective Registrar at the contact number or the email id mentioned in the table. If, for any reason, you want to change the bank details in your investments, then also you need to contact the respective Registrar and seek the New Bank Mandate Form.

Once you are ready to send the duly filled form to change the bank details, don’t forget to attach a cancelled cheque leaf and photo ID proof along. Once the details get changed, the Registrar itself will intimate you regarding the change.

Understanding what Debt Recast means with Kingfisher Airlines Example

Karthik posted the the following comment a few days ago:

Karthik Reddy Chintaparthi October 15, 2012 at 5:12 pm [edit]

Hi Manshu,

Offlate I have been listening many “Debt Recast” by banks to some of the institutions like Kingfisher, may be Suzlon. Could you please post a detailed article on this debt recast ? Will this affect banks ?

Thanks much,


Debt Recast means that your lenders alter the terms of your loan easing your interest and / or principal burden, and this is usually done when a company is facing adverse circumstances. Lenders believe that easing the loan conditions will help the company get back on its feet and will be beneficial for them in the long run.

If you look at how the Kingfisher Airlines story has evolved in the past few years, Kingfisher lenders had recast their debt once in November 2010 and the details from that debt recast are good examples of what easing interest or principal burden means.

Here are the five main points from that debt recast:

(1) Conversion of debt of upto Rs. 1355 crores from lenders into share capital.

(2) Conversion of debt of upto Rs. 648 crores from promoters into share capital.

(3) Reschedulement of repayment of the balance debt to lenders over 9 years with a moratorium of 2 years.

(4) Reduction in interest rates.

(5) Sanction of additional fund and non-fund based facilities by the lenders.

The first of these points is fairly easy to understand which means that the lenders converted their debt into shares and this resulted in forgoing their guaranteed interest payments and instead their loans are now converted into shares which don’t have a guaranteed payout and are more volatile in nature. Kingfisher Airlines benefited because they are relieved of interest payment on this part of the debt and this eases their cash outflow.

The second point is interesting because it doesn’t directly affect the lenders, but the lenders negotiate with promoters of the airlines and say that since we are forgoing our loans, you should match that too. In this case, the debt from the owners was converted into shares and they gave up their right to regular interest payment as well.

The third point means that the debt is spread out over a longer repayment period and moratorium means that there will be a delay in payment of the debt.

Reduction in interest rates doesn’t need any further explanation.

The last point of sanctioning additional funds means that the lenders have agreed to give them more money with the hope that it will help them recover some of their old dues. They may have done this because the company needed to pay salaries or oil bills and had immediate need for cash.

So, to summarize, debt recasts are done when a company is struggling and its lenders believe that they are better off putting some money in the company, easing their loan burdens and getting it back healthy again instead of trying to recover their assets when the company goes bankrupt. This does affect banks negatively except if in the long run the company turns around and the lender’s shares are worth more than

As you can probably see, this is a bad situation for both the lenders and the promoters. Both have to forgo their interest payments, and even the principal on their debt will have to be written down.

So to answer Karthik’s original question – yes, this does affect banks and usually adversely (unless they get great terms which is unlikely) and I’d imagine that no bank ever wants to get into a situation where they want to do a debt recast. However, in the long run this can turn out to be a good thing if the company turns around and the shares are worth a lot more than the debt.

The primary reason to do a debt recast is because the banks and lenders believe that easing up the loan terms will benefit the company and it will be able to get back on its feet and this will result in more money for the banks than a bankruptcy situation.

It seems that 2 years ago, banks believed that Kingfisher Airlines still had a chance, and did a debt recast, but that thinking has changed now, and it looks like they don’t believe the airline will survive at all.

There have been news reports that banks have an exposure of Rs. 7,000 crores on Kingfisher Airlines and the collateral barely covers this loan, and that shows you why banks did a recast two years ago.

They knew that in case of a bankruptcy, they can only get what the collateral was worth and it’s clear now that the collateral wasn’t enough to cover much of the loan. It was better at the time to pump in some more cash, ease terms and hope that things turn around. The past two years have shown that the situation hasn’t improved, and it looks like now the banks feel that it’s better to write off these loans instead of pumping in more funds and throwing good money after bad.

To summarize, banks do a debt recast when they think that the company still has a chance at survival and can be more profitable to the banks if it survives even though that means some losses in the short run. This does affect banks negatively and I imagine neither a bank nor a company ever wishes to be in this situation.

Hippos that fall from sky don’t need UID

Let’s start this week with a fascinating article from Slate that talks about our fears and what role evolution had to play in it. For most of our existence, we were prey and the article looks at how being at that position helped us evolve over millions of years.

By now you must have heard and read about the Nifty flash crash from last week, and Ajay Shah has a very thoughtful post on how to think about such situations. Should you lean towards trying to prevent such things in the future, if so at what cost or should you look at developing a financial system that’s resilient to such shocks.

National Post on Felix Baumgartner’s unbelievable dive from the edge of space. I felt this was a very good comprehensive article that covers a lot of ground about the jump.

Fred Wilson writes briefly about “public social” versus “dark social” and this is the first time I’ve heard the term and I thought it was a useful way of looking at things.

Business Standard has an article on the next steps for UID.

I’m a big Seinfeld fan so I really loved this video of Jerry and Kramer in Comedians in Cars getting Coffee.

The question that’s been on your mind all these days – do crocodiles prey hippos?

Finally, OneMint crossed 10,000 readers this week and I’m thankful to all of you who have subscribed through either email, Facebook, Twitter or just visit the site. When I started out, I never thought there could be 10,000 people subscribed to OneMint one day, this is truly amazing!

If you think OneMint will be useful to anyone you know, please send them one of the links to subscribe on either email or Facebook.



And this is my Twitter account from which I tweet out daily OneMint posts, other articles of interest and some personal stuff as well.

Have a good weekend!