Portfolio Flows Into India: Do Domestic Fundamentals Matter?

January 1, 2003

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Format: Chicago

Poonam Gupta, and James P. F. Gordon Portfolio Flows Into India: Do Domestic Fundamentals Matter?, (USA: International Monetary Fund, 2003) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper analyzes the factors affecting portfolio equity flows into India using monthly data. Flows to India are small compared to other emerging markets, but seem to be relatively less volatile. They also seem to be quite resilient. The paper shows that portfolio flows are determined by both external and domestic factors. Among external factors, LIBOR and emerging market stock returns are important, while the primary domestic determinants are the lagged stock return and changes in credit ratings. In quantitative terms, both external and domestic factors are found to be about equally important.

Subject: Balance of payments, Emerging and frontier financial markets, Financial institutions, Financial markets, Financial services, Interbank rates, Portfolio investment, Stock markets, Stocks

Keywords: Asia and Pacific, Capital flows, Emerging and frontier financial markets, Equity flow, Equity investment, Exchange rate, FII flow, FII inflow, FII investment, Flows to India, Global, India, Interbank rates, Lagged return, Market capitalization, Portfolio flows, Portfolio investment, Stock market return, Stock markets, Stocks, WP

Publication Details

Pages:

37
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/020
Stock No:

WPIEA0202003
ISBN:

9781451843866
ISSN:

1018-5941

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