FOREIGN PORTFOLIO INVESTMENTS DATA - ECONOMY
News: Foreign
players back with a bang, but tighter disclosure norms may put spanner in their
works
What is in the news?
●
India has remained one of
the attractive destinations for foreign portfolio investors (FPIs) with total
inflows at Rs 61,958 crore so far in the current fiscal.
Key takeaways from the news:
●
India’s strong
macroeconomic fundamentals and rising risk appetite are the reasons for the
rise in FPI investment in the country’s market.
●
FPI invested Rs 11,631
crore in April, Rs 43,838 crore in May and Rs 6,489 crore in the first two days
of June into the domestic equity market, according to National Securities Depository Ltd (NSDL) data.
●
The Reserve Bank of India
also sees the rise in FPI flows as an opportunity to buy dollars and increase
foreign exchange reserves.
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The recent RBI data,
which comes at a lag, showed that the country’s forex reserves stood at $589.138
billion.
●
When the RBI purchases
dollars, it gives the rupee in return, which helps in improving the banking
system liquidity.
|
Foreign Direct Investment |
Foreign Portfolio Investment |
|
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Foreign Direct Investment (FDI) is an
investment made by a foreign company or an individual in a foreign country
with the intention of establishing a long-term business interest. ●
The investor acquires a controlling
interest in a foreign company by purchasing at least 10% of the company's
shares.
|
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Foreign Portfolio Investment (FPI) is an
investment made by foreign investors in foreign securities, such as stocks,
bonds, and other financial assets. ●
Unlike FDI, FPI does not involve the
acquisition of a controlling interest in the company. ●
FPI is a short-term investment, with
investors buying and selling securities based on short-term market trends. |
National Securities Depository Limited:
●
The National Securities
Depository Limited (NSDL) is an Indian assets depository that stores digital securities such as investor
bonds, shares, and debentures.
●
The enactment of Depositories Act in August 1996 paved
the way for establishment of NSDL.
●
It functions under the Ministry of Finance.
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NSDL is supported by the
Industrial Development Bank of India (IDBI), Unit Trust of India (UTI), and the
National Stock Exchange (NSE).