Explain the factors affecting the flow of foreign institutional investment (FII) in India in present scenario.

FII inflows augment the sources of funds in the Indian capital markets. In general, an increase in the supply of funds reduces the required rate of return for equity and enhances stock prices. Simultaneously, it fosters investment by Indian firms in the country. The factors affecting FIIs flows can be classified in two categories (i) International (ii) Domestic (i) International Factors International market Capitalization Exchange Rate Variance Foreign Interest Rate Foreign Industrial Production International Crisis (ii) Domestic Factors Market Return on Investment in Shares Variance of Return in Stock Market Beta of the Share Market Information Asymmetry Impact Cost Non-promoter Share Holdings Domestic Credit Rating Domestic Companies P/E Ratio Infrastructure Facility Macroeconomic Factors FIIs investments in India are also influenced by factors like rupee movement, policy reforms, investment regulations, interest rates, liquidity and macro economic conditions.