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Attention to Economic Factors and Its Response to Foreign Portfolio Investment: An Evidence from Indian Capital Market

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Part of the book series: Studies in Systems, Decision and Control ((SSDC,volume 440))

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Abstract

Stock market consists of a variety of investors. Among these, Foreign Portfolio Investors (FPIs) is a key investment influx. These investments can change or fluctuate due to several macroeconomic factors which can cause a shift in the dynamics of the markets in India. This paper examines the factors influencing for foreign portfolio investment in long run as well as short run. The sample comprises of 120 monthly observations on Foreign Portfolio Investment (FPIs) and Macro economic variables such as Oil prices (OP), Gross Domestic Product (GDP), Interest Rate (IR), Exchange rate of Indian Rupee with USD (ER), Inflation (CPI), Nifty Index (NSEI), 10 year Bond Prices (BP) and Index of Industrial production (IIP) over a period of 10 years, spanning from January 2013 to November 2022. The study employed Autoregressive Distributed Lag model (ARDL) to establish the long run association with error correction models. The result indicates that there is long run association between the Foreign Portfolio Investment and macro-economic variables. Among this, NSEI, IIP and ER played a significant role to determine FPI investments in the long run, whereas in the short run, FPI was impacted by ER and NSEI significantly.

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Authors and Affiliations

  1. School of Business and Management, CHRIST (Deemed to be University), Bannerghatta Road Campus, Bangalore, India

    Sathish Pachiyappan, Anchita Kandral, John Paul Raj V & Saravanan Vellayan

  2. Department of Commerce, Manipal Academy of Higher Education, Manipal, India

    H. N. Shylaja

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  1. Sathish Pachiyappan
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  2. Anchita Kandral
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  3. H. N. Shylaja
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  4. John Paul Raj V
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  5. Saravanan Vellayan
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Correspondence to Sathish Pachiyappan .

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Editors and Affiliations

  1. Middle East Technical University, Kalkanlı, Güzelyurt, KKTC, Türkiye

    Bahaaeddin Alareeni

  2. Faculty of Computer Science and Engineering, AlAlamein International University, Alexandria, Egypt

    Islam Elgedawy

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Pachiyappan, S., Kandral, A., Shylaja, H.N., Raj V, J.P., Vellayan, S. (2024). Attention to Economic Factors and Its Response to Foreign Portfolio Investment: An Evidence from Indian Capital Market. In: Alareeni, B., Elgedawy, I. (eds) AI and Business, and Innovation Research: Understanding the Potential and Risks of AI for Modern Enterprises. Studies in Systems, Decision and Control, vol 440. Springer, Cham. https://doi.org/10.1007/978-3-031-42085-6_57

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  • DOI: https://doi.org/10.1007/978-3-031-42085-6_57

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  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-031-42084-9

  • Online ISBN: 978-3-031-42085-6

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