In deficit condition of Balance of Payment if the central bank sells foreign exchange then this particular transaction is known as .......

Official reserve sale.

The correct answer is Option (1) → Official reserve sale.

When a country has a deficit in its Balance of Payments (BOP), it means that the total payments going out of the country (for imports, investments abroad, etc.) exceed the total payments coming into the country. To finance this deficit, the central bank of the country uses its foreign exchange reserves. The transaction where the central bank sells its foreign exchange to cover a BOP deficit is known as an Official reserve sale.

Here's why the other options are incorrect:

• Portfolio Investment: This refers to the purchase of financial assets like stocks and bonds by foreign investors, without gaining control of the company. It's a component of the financial account of the BOP, but it is not a direct action by the central bank to correct a deficit.

• Net Invisibles: This is a component of the current account in the BOP, which includes the net balance of services, income, and transfers. It's a factor that contributes to the overall BOP position but is not a central bank transaction.

• Net factor income: This is also a component of the current account, specifically the income earned by residents from abroad minus the income paid to non-residents. Like net invisibles, it's a part of the BOP calculation, not a transaction made by the central bank to correct an imbalance.