ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Note on Portfolio Flows into India

This note discusses the issues raised by the expert group on encouraging foreign institutional investor inflows released in November 2005. The spiral nature of the co-movement of inflows and stock prices warrants testing of the hypothesis that the surge in flows is based only on economic fundamentals or the strength of traded companies. The expert group did not make such an analysis and instead discusses the beneficial aspects of speculation. It quietly ignores the perception that sub-accounts and participatory notes provide the avenues through which some speculative flows could have occurred.

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