Foreign Portfolio Investment

Explanation :

Context: Post Union Budget 2021-22 presentation, the Sensex has risen 11.36%, , due to increased Foreign Portfolio Investments (FPIs).

• Foreign portfolio investment (FPI) consists of securities and other financial assets passively held by foreign investors.
• It does not provide the investor with direct ownership of financial assets and is relatively liquid depending on the volatility of the market.
• Examples of FPIs include stocks, bonds, mutual funds, exchange traded funds, American Depositary Receipts (ADRs), and Global Depositary Receipts (GDRs).
• Unlike FDIs, a Financial Portfolio Investment does not require any transfer of IP, technology or know-how. There is no need to enter a joint venture with a partner company.
• Portfolio investments typically have a shorter time frame for investment return than direct investments. As with any equity investment, foreign portfolio investors usually expect to quickly realize a profit on their investments.
• As securities are easily traded, the liquidity of portfolio investments makes them much easier to sell than direct investments.
• Portfolio investments are more accessible for the average investor than direct investments because they require much less investment capital and research.