Fdi & Fii Impect on Indian Stock Market

Sunday, August 30, 2009 FDI and FII: how involve to Indian economy Both FDI and FII atomic number 18 part of hostile capital formation. FDI: the official definition of foreign direct investment are FDI occurs when an entity or investor from atomic number 53 commonwealth (home country e.g. India) obtain or acquires the controlling interest in an entity in a nonher country (host country e.g. USA) and then ope sets and manages the entity and its assets as part of the multinational business of the investing entity. FII: foreign institutional investor its category of investment mode that are more considerably traded , may be less permanent , and do not represent a controlling stake in an attempt , these include investment via equity instrument ( stocks) or debt ( bonds) of a foreign enterprise which does not necessarily represents a keen-sighted term interest. Their main intention is to make capital gain. For e.g. if both FII bought GDR ( global depository receipt ) or any instrument which used by non citizen of India of reliance company at 90 US dollar and after some beat circumstances legal injury touch 150 US dollar plead after 2 day than he lead at one time will sell that share to make capital gain. FII: how to impact Indian economy 1.

FII leads to appreciation of the currentness: FII need to keep on an account with RBI fro all transaction. to understand the implication of FII on the exchange rate we have to understand how the value of one currency appreciate or depreciate against the other currency What is currency appreciation: for example if the current foreign exchange rate is 1 USD = 50 INR (Indian rupees) but after some time the exchange rate fluctuate to 1 USD = 40 INR. This means Indian rupees appreciate over the US dollar. The logic is really simple. e.g. if Indian customer want buy one sum of money of ice cream from USA market ( suppose price of 1 ice cream is 1 USD ) he will have to even up 50 INR which is equal to 1 USD. that when exchange rate changes he will have to pay 40 INR instead of INR... If you want to get a upright essay, order it on our website: Orderessay

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