Effects of Macro Economic Indicators on Foreign Portfolio Investments

Title

Effects of Macro Economic Indicators on Foreign Portfolio Investments

Creator

Patil A.; Lakshmi R.B.; Niranjan L.R.; Vas J.

Description

In this study, both institutional and retail investors were observed making exits and entries based on macroeconomic data, utilizing measurable indicators such as GDP, inflation, bank rates, foreign exchange rates, trade volume on the national stock exchange, and portfolio investments. Employing a Vector Error Correction Model (VECM) in an econometric analysis, the study found a significant association between macroeconomic indicators and portfolio investments in India. Investors followed a discernible pattern of entering and exiting markets, with economic growth fostering greater investments. Notably, GDP, NSE Volume, and bank rates were identified as variables impacting foreign portfolio investments. In the long run, GDP positively affected foreign portfolio investments, while inflation and foreign exchange rates exhibited a detrimental influence, leading to decreased portfolio investments. Foreign Institutional Investors, prioritizing profits over business operations, focused on market sentiments, directing investments towards economies with potential performance and resulting in a higher volume of capital inflow. Overall, the study concludes that a robust economic condition attracts superior foreign portfolio investments. 2024 IEEE.

Source

Proceedings of 9th International Conference on Science, Technology, Engineering and Mathematics: The Role of Emerging Technologies in Digital Transformation, ICONSTEM 2024

Date

2024-01-01

Publisher

Institute of Electrical and Electronics Engineers Inc.

Subject

Foreign Portfolio Investment; Gross Domestic Product; Monetary Policy; National Stock Exchange Volume; the VECM (Vector Error Correction) Model

Coverage

Patil A., School of Business & Management, Christ University, Bangalore, India; Lakshmi R.B., School of Business & Management, Christ University, Bangalore, India; Niranjan L.R., School of Business & Management, Christ University, Bangalore, India; Vas J., School of Business & Management, Christ University, Bangalore, India

Rights

Restricted Access

Relation

ISBN: 979-835036509-2

Format

Online

Language

English

Type

Conference paper

Identifier

https://doi.org/10.1109/ICONSTEM60960.2024.10568614

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