What are Fractional Shares? A Guide for Investing in US Stocks From India

Fractional investing has changed the way many Indian investors approach global markets. Even a few years ago, investing in US stocks from India meant committing a large sum upfront. Now, you can begin with whatever amount fits your budget and still own a slice of some of the most influential companies in the world. That shift has made fractional shares a practical entry point for anyone taking their first steps into global diversification.

What Are Fractional Shares?

Think of fractional shares as buying a part of something instead of the entire thing. The easiest way to picture it is a cake. You don’t always need the full cake; sometimes one piece is enough. If a stock costs ₹10,000 and you invest ₹1,000, you own a piece of that share. Nothing changes about the stock itself, only the size of your ownership.

This model works well for investors looking at high-value US companies. Even if a share of Nvidia or Amazon feels too expensive, fractional shares in India allow you to invest a small amount and still participate in their growth. You aren’t locked out because of the price of a single unit.

How Do Fractional Shares Work?

Fractional shares operate on a simple formula: You enter the amount you want to invest, and the platform calculates the fraction you will receive.

For instance: 

• If Alphabet (Google) trades around $318 and you put in $10, you end up with roughly 0.031 units.
• If Broadcom trades near $377 and you invest $50, you get about 0.133 units.

Your portion moves exactly like the full share. When the price rises, so does the value of your slice. It’s a smaller piece of the same underlying asset.

How to Buy Fractional Shares in India?

If you are wondering how to buy fractional shares in India, the process is far simpler today than it used to be. Apps like INDmoney allow you to open a US investing account within minutes.

A simple flow would look like this:
• Open INDmoney and activate your US account.
• Add money to your US wallet.
• Pick the stock you want.
• Choose the “Buy in Dollars” option.
• Type the amount you wish to invest, even $1 works.
• The app shows the fraction you will receive before you confirm the order.

Selling works the same way. You can exit by specifying either the dollar amount or the fractional quantity.

Why Are Fractional Shares Useful?

Fractional investing solves a few common problems investors face.

1. You don’t need a large amount to begin: US stocks like Intel, Microsoft and AMD etc. can be expensive, and many investors delay starting because of this. With fractional ownership, you simply begin with what you have instead of waiting to match the stock price.
2. Diversification becomes easier: Instead of putting your entire investment into one company, you can divide the same amount across multiple US stocks like Oracle, Salesforce, Apple and more. It is a bit like trying different dishes instead of ordering one big portion.
3. Gradual accumulation becomes possible: If you invest a fixed amount each month, price fluctuations no longer stop you from continuing. You buy smaller or larger fractions depending on the market, but you stay consistent.
4. Access to global leaders:  You may not want to save for months to afford a full share of Adobe, Accenture or Qualcomm. Fractional shares let you build your position slowly without committing a large sum on day one.

Fractional Investing Risks You Should Be Aware Of

Fractional shares still carry market risks because they represent real equity. Their value moves with the underlying stock. Voting rights are usually offered only on whole shares, so fractional investors may not have a voice in corporate decisions. Also, not every stock may be available in fractional form; availability depends on the platform.

How Does Currency Affect Fractional Investing?

Since these investments are in USD, the USD-INR exchange rate plays a role in how much you pay. If the dollar strengthens, your purchase becomes more expensive.

For example, buying $50 worth of a stock:
At ₹85 per dollar → you spend ₹4,250
At ₹87 per dollar → you spend ₹4,350

Even if the stock price doesn’t budge, the cost for an Indian investor changes. This is important for anyone investing regularly.

How Are Fractional Shares Taxed?

Fractional units are taxed the same way as full shares. Gains from holdings under 24 months are taxed as per your slab, while those held longer are taxed at 12.5% plus surcharge and cess. Dividends from US companies come with a 25% withholding tax in the US, but that amount can be adjusted against your Indian tax liability under the DTAA.

Is Fractional Investing a Good Fit for You?

Fractional investing works well for investors who want to enter global markets without committing large capital. If you prefer starting small, building your portfolio steadily, and spreading your risk across multiple companies, this approach is useful. It takes away the pressure of matching high share prices and helps you stay consistent with your investment plan.

Disclaimer:

The content is meant for education and general information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Past performance is not indicative of future returns. The securities quoted are exemplary and are not a recommendation. This in no way is to be construed as financial advice or a recommendation to invest in any specific stock or financial instrument. The figures mentioned in this article are indicative and for general informational purposes only. Readers are encouraged to verify the exact numbers and financial data from official sources such as company filings, earnings reports, and financial news platforms. The Company strongly encourages its users/viewers to conduct their own research, and consult with a registered financial advisor before making any investment decisions. All disputes in relation to the content would not have access to an exchange investor redressal forum or arbitration mechanism. Registered office address: Office No. 507, 5th Floor, Pragya II, Block 15-C1, Zone-1, Road No. 11, Processing Area, GIFT SEZ, GIFT City, Gandhinagar – 382355. IFSCA Broker-Dealer Registration No. IFSC/BD/2023-24/0016, IFSCA DP Reg No: IFSC/DP/2023-24/010.