Foreign portfolio investments (FPIs) gained momentum in India, particularly, in the post-liberalization period. On the other hand, the Indian primary market acts as the prime platform for corporate capital formation especially through the initial public offering (IPO). The foreign institutional investments have always been known for their volatile nature and quick reversal. This article is an attempt to identify how the foreign institutional investments in the Indian IPO segment augment financial development, and to what extent such investment can be considered close to real investments by being in the primary market.
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