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    Economic Implications of Foreign Portfolio Investments

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    sharukh lakhani
    The document discusses foreign portfolio investments (FPI) in India. It outlines the categories of foreign institutional investors that invest in India, such as banks, insurance companies, pension funds, and mutual funds. Some reasons why India attracts FPI are its robust growth, large skilled labor force, and cost competitiveness. However, lack of political and economic stability, poor infrastructure, and absence of incentives can deter foreign investments. The document also examines how FPI impacts the Indian economy by increasing money supply, consumption, and credit off-take, but it can also create asset bubbles and hurt small investors and exports.

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    Economic Implications of Foreign Portfolio Investments

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    sharukh lakhani
    3K views16 pages
    The document discusses foreign portfolio investments (FPI) in India. It outlines the categories of foreign institutional investors that invest in India, such as banks, insurance companies, pension funds, and mutual funds. Some reasons why India attracts FPI are its robust growth, large skilled labor force, and cost competitiveness. However, lack of political and economic stability, poor infrastructure, and absence of incentives can deter foreign investments. The document also examines how FPI impacts the Indian economy by increasing money supply, consumption, and credit off-take, but it can also create asset bubbles and hurt small investors and exports.

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    The document discusses foreign portfolio investments (FPI) in India. It outlines the categories of foreign institutional investors that invest in India, such as banks, insurance companies, pension funds, and mutual funds. Some reasons why India attracts FPI are its robust growth, large skilled labor force, and cost competitiveness. However, lack of political and economic stability, poor infrastructure, and absence of incentives can deter foreign investments. The document also examines how FPI impacts the Indian economy by increasing money supply, consumption, and credit off-take, but it can also create asset bubbles and hurt small investors and exports.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    3K views16 pages

    Economic Implications of Foreign Portfolio Investments

    Uploaded by

    sharukh lakhani
    The document discusses foreign portfolio investments (FPI) in India. It outlines the categories of foreign institutional investors that invest in India, such as banks, insurance companies, pension funds, and mutual funds. Some reasons why India attracts FPI are its robust growth, large skilled labor force, and cost competitiveness. However, lack of political and economic stability, poor infrastructure, and absence of incentives can deter foreign investments. The document also examines how FPI impacts the Indian economy by increasing money supply, consumption, and credit off-take, but it can also create asset bubbles and hurt small investors and exports.

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    of 16

    ECONOMIC IMPLICATIONS OF FOREIGN

    PORTFOLIO INVESTMENTS
    FINANCIAL MARKETS

    DERIVATIVES
    CAPITAL MARKETS CURRENCY MARKET
    MARKET
    FOREIGN INSTITUTIONAL INVESTORS (FII’s)

    “ An institution that is a legal entity


    established or incorporated outside India
    proposing to make investments in India only in
    securities . ”
    - SEBI
    CATEGORIES OF FII’s

    BANKS

    INSURANCE COMPANIES

    PENSION FUNDS

    HEDGE FUNDS

    MUTUAL FUNDS

    ASSET MANAGEMENT COMPANIES


    REASONS INDIA ATTRACTS FII’S
    • ROBUST DOMESTIC GROWTH STORY
    • SECOND FASTEST GROWING ECONOMY
    • INCREASING NO OF SKILLED LABOUR
    • COST COMPETATIVENESS
    ROAD BLOCKS IN FII INVESTMENT
    • LACK OF POLITICAL STABILITY
    • LACK OF ECONOMIC STABILITY
    • POOR INFRASTRUCTURE
    • ABSENCE OF INCENTIVES
    DETERMINANTS OF FII INFLOWS
    • MARKET SIZE
    • LIBERALISED TRADE POLICY
    • LABOUR COSTS AND PODUCTIVITY
    • POLITICAL SCENARIO
    • INFRASTRUCTURE
    • INCENTIVES AND OPERATING CONDITIONS
    • DISINVESTMENT POLICY
    FII PORTFOLIO
    TELECOM UTILITIES
    8% 5%
    CONCUMER GOODS
    10%

    MATERIALS
    10%

    IT ENERGY
    10% 13%

    INDUSTRIALS
    14%

    FINANCIALS
    28%

    HEALTHCARE
    4%
    NET INFLOWS
    350000

    300000

    250000

    200000

    150000

    100000

    50000

    0
    1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

    -50000
    NET INFLOWS
    350000

    300000

    250000

    200000

    150000

    100000

    50000

    0
    1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

    -50000
    NET INFLOWS
    350000

    300000

    250000

    200000

    150000

    100000

    50000

    0
    1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

    -50000
    HIGH FII
    INFLOW
    HIGHER
    ECONOMIC
    GROWTH
    HIGHER
    MONEY
    SUPPLY

    RISING
    DEMAND

    LOWER
    INTEREST
    RATES

    HIGHER
    CONSUMPTION
    HIGHER
    CREDIT OFF-
    TAKE
    DISADVANTAGES OF FII’s
    • CREATION OF ASSET BUBBLES
    • IMPACT ON SMALL INVESTORS
    • IMPACT ON EXPORTS
    • SHORT TERM INVESTMENT TENDENCY

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