MBA Tutorials: Foreign Direct Investment and Foreign Institutional Investor

Foreign Direct Investment(FDIs)

* FDI occurs when an investor from one country obtains or acquires or invests in an asset in another country.
* Long term Investments
* Focus Long term returns
* In India, growth rate of FDI are more than the GDP growth rate
* In the long run, FDIs are able to provide stable capital inflows
* In the long run, FDIs are proved to be more fruitful and balanced from investment & savings point of view.


Foreign Institutional Investor(FIIs)

* An institution or entity, which invests money in the financial stock markets or securities of another country.
* Invest in Equities & Debts
* Short term Investments
* Highly volatile
* Focus Short term returns
* FIIs have been the key drivers of the stock markets.
* When FIIs withdraw the capital from the domestic market or we can say when they sell their share it creates the demand for US dollar and that time demand for dollar will be more and INR will depreciate.