This paper analyses flow of foreign portfolio investment (FPI) in India from period 2012-2015. This paper also looks at components of FPI – debt and equity and industry wise FPI inflow during the period is also provided.
time series analysis is done under exploratory analysis using line chart. It was noticed that trend of FPI was quite volatile resulting in zig zag line curve with one shocking decline in may2013. Recent trend of FPI in nov 2015 shoes outflow of INR 9000 crore. This decline can be due to tepid domestic demand resulting in week September quarter earnings of Indian companies, week global demand, melt down of china and expectation of interest rate hike by fed reserve resulting on outflow of investment from emerging markets including India.
Equity is preferred for FPI in 2012-2013 but reversal of trend can be seen in 2014-2015 when debt instrument got majority of FPI. Investors did not find equity giving enough risk adjusted return so they shifted toward debt instruments.
Sector wise trend of FPI is also discussed in the study.