Determinants of Foreign Portfolio Investment in India
Abstract
This study focused on Determinants of Foreign Portfolio Investment inIndia. Portfolio investment isbasically confined to the secondary market. The benefit from these flows has to penetrate to the realeconomy via the stock market activity. Not much impact was found in the primary market. Among thecapital market variablesFPI’s impact was mostly felt in the volatility and market capitalization of the twomajor stock exchanges in India–BSE &NSE. Also the benefit of FPI has not trickled down much into the realvariables as the mainstream model predicts. Hence careful planning and policy formulation is needed toavoid sudden capital flight as well as for optimum utilization of this much debated “Hot Money”.
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