Foreign investors pump in Rs 14,000 cr into Indian capital markets

FDI vs FPI

Foreign Direct Investment (FDI) is the investment made by a person or a company in one country into businesses located in another country.
Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets.
FDI is an investment made in the form of equity capital, reinvested earnings or other direct capital by setting up an enterprise.
FDI enables setting up of businesses; more businesses mean more jobs and capacity addition.
In other words, FDI is a source of capital in the primary market and this capital gets converted into goods and services.
The key to foreign direct investment is the element of control. Control represents the intent to actively manage and influence a foreign firm’s operations. This is the major differentiating factor between FDI and a passive foreign portfolio investment.

Foreign Portfolio Investment (FPI) means investing in the financial assets of a foreign country, such as stocks or bonds available on an exchange.
FPI is often referred to as “hot money” because of its tendency to flee at the first signs of trouble in an economy.

Why in News?

Foreign investors pumped in nearly 14,000 crore rupees into the Indian capital markets so far in November.
Before this, FPIs dumped Indian equities worth 24,548 crore rupees in October and 14,767 crore rupees in September.
Prior to the outflow, FPIs were incessantly buying Indian equities in the last six months from March to August and invested 1.74 lakh crore rupees during the period.

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