Sir i requested to plz explain the above question. and alos one more doubt that What is Foriegn institutional investers and Foriegn Direct Investment? what is difference FII and FDI.
which is best suitable for Indian economy for grouth Sensex:
=======
The BSE Sensex or Bombay Stock Exchange Sensitive Index is a value-weighted index composed of 30 stocks with the base April 1979 = 100. It consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange. These companies account for around one-fifth of the market capitalization of the BSE.
The Sensex is generally regarded as the most popular and precise barometer of the Indian stock markets.
The base value of the Sensex is 100 on April 1, 1979.
At irregular intervals, the Bombay Stock Exchange (BSE) authorities review and modify its composition to make sure it reflects current market conditions.
The abbreviated form "Sensex" was coined by Deepak Mohoni around 1990 while writing market analysis columns for some of the business newspapers and magazines. It gained popularity over the next year or two.
The stock market has grown by more than seven times from June 1990 to today. Using information from April 1979 onwards, the long-run rate of return on the BSE Sensex can be estimated to be 0.52% per week (continuously compounded) with a standard deviation of 3.67%. This translates to 27% per annum, which translates to roughly 18% per annum after compensating for inflation.
FDI:
====
Foreign direct investment (FDI) is the movement of capital across national frontiers in a manner that grants the investor control over the acquired asset. Thus it is distinct from portfolio investment which may cross borders, but does not offer such control. Firms which source FDI are known as 鈥榤ultinational enterprises鈥?(MNEs). In this case control is defined as owning 10% or greater of the ordinary shares of an incorporated firm, having 10% or more of the voting power for an unincorporated firm or development of a greenfield branch plant that is a permanent establishment of the originating firm.
In the years after the Second World War global FDI was dominated by the United States, as much of the world recovered from the destruction wrought by the conflict. The U.S. accounted for around three-quarters of new FDI (including reinvested profits) between 1945 and 1960. Since that time FDI has spread to become a truly global phenomenon, no longer the exclusive preserve of OECD countries. FDI has grown in importance in the global economy with FDI stocks now constituting over 20% of global GDP.
Types of FDI:
* Greenfield investment: direct investment in new facilities or the expansion of existing facilities. Greenfield investments are the primary target of a host nation鈥檚 promotional efforts because they create new production capacity and jobs, transfer technology and know-how, and can lead to linkages to the global marketplace. Greenfield investments are the principal mode of investing in developing countries.
* Mergers and Acquisitions: occur when a transfer of existing assets from local firms to foreign firms takes place. Cross-border mergers occur when the assets and operation of firms from different countries are combined to establish a new legal entity. Cross-border acquisitions occur when the control of assets and operations is transferred from a local to a foreign company, with the local company becoming an affiliate of the foreign company. Mergers and acquisitions are the principal mode of investing in developed countries. Let's start with Sensex. It's an abbreviation of the Bombay Exchange Sensitive Index. The largest and most actively-traded stocks on the BSE (Bombay Stock Exchange) take a part of it.
Foreign Institutional Investor means an entity established or incorporated outside India which proposes to make investment in India. Could be pension or mutual funds, investment trusts, institutional portfolio managers, etc.
Foreign Direct Investment is an investment made by a foreign individual or company in productive capacity of another country for example, the purchase or construction of a factory. |
