News: Foreign investors pulled out a massive Rs 94,000 crore from the Indian stock market, making it the biggest monthly outflow ever. This was triggered by the elevated valuation of domestic equities and attractive valuations of Chinese stocks.
1. Foreign Portfolio Investment (FPI) refers to the investments made by foreign investors in the financial assets of a country, such as stocks, bonds, mutual funds or other securities.
2. Unlike Foreign Direct Investments (FDI), which is long term and involves direct ownership and management control, FPI is short term and involves passive holdings.
3. Benefits of FPI include: A) Inflow of foreign capital B) Development of stock market C) Access to global markets D) Portfolio diversification.
4. Risks associated with FPI include: A) Market volatility B) Currency Risks C) Different regulatory policies D) Economic dependence.
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