Time high of rs 3229 crores in dec 1994 since fiis invested in indian capital market total inflow of fiis in this period was rs 821070 crores and outflow for the same period was rs 371190 crores. The fiis have both positive and negative impact on the domestic economy, triggering significant influence in broadly three areas: stock market, exchange rate and foreign exchange reserves it increases savings of low- and middle-income developing countries ( menkhoff, 2003 mody, taylor & kim, 2001 ) and enhances market depth and breadth. The causal linkage between fii flows and stock market movements, a period of nineteen consecutive financial years ranging from january, 1992 to december, 2010 is selected for the empirical study. Stock market observed that the main reason behind the development of the stock market in india in the last 15 years has been the growing participation of institutional investors and the indian mutual funds combined together and the total assets under their management amounts.
56 chapter-5 research methodology 51 research design it is a descriptive research between fii and indian stock market 52 sources of data nse, sebi, money control 53 data collection method secondary 54 population nse, bse (april 2006 to december 2015) 55 sampling size cnx nifty, cnx 500, s&p bse sensex. Indian stock market fiis' herding tendency is more (2006) recorded the strong impact of herding on stock except for the crucial time period of 1998-1999. 3 the impact study of fiis flows on domestic stock market is important from government as well as investor point of view, for example, does the opening up of the market for fii increase speculation in the market and thus make the market more volatile and more vulnerable to foreign shocks the impact of fii in equity investment behavior in stock. The herding and positive feedback trading by fiis is a cause for concern for government of india, capital market regulator (sebi), and the country's central bank (rbi) as it adversely affects stock prices and volatility.
The investment by foreign institutional investors (fiis) has become a dynamic force in the development of indian stock market and is increasingly seen as an important cause of stock market volatility. Better in 2009-2010, the number of new fiis registered declined to 87 a total number of registered fiis increased marginally from 1,713 in march 2010 to 1,722 by march 2011. The findings of the present study are inconsistent with the prevailing notion of the ultimate impact of notorious fiis on the indian stock market, which suggests that the direction of causality runs from net fii inflows to stock market returns.
The effect of fiis on indian stock market volatility by using time series arima approach the empirical findings suggest that, fiis are not the only and influencial cause of volatility in indian equity markets. Fiis inflows into the indian equity markets have touched us$ 10 billion in the april to september period of 2009-10 foreign direct investments (fdi) into india went up from us$ 251 billion in 2007 to us$ 465 indian economy has been witnessing a phenomenal growth since the last decade. Stock market has gained popularity during recent past years, household investor participation increased, based on stock market index returns of 72 per cent in 2003 followed by 11 per cent in 2004, and growing confidence in the transparency and robustness of the market design which was put in place over the period 1993-2001. The project deals with the impact of foreign institutional investors on indian stock market this research project studies the relationship between fiis investment and stock indices for this purpose india's two major indices ie sensex and s&p cnx nifty are selected.
Behaviour of fiis and their impact of trading biases upon stock market volatility it was found that there is a strong evidence for the fact that fiis on daily basis have been positive investors. Although stock market return and stock market volatility appear to have a bi-directional relationship with fiis' herding, herding is found to be affected by return over a longer time period therefore, we tried to determine the impact of return and other stock market variables on herding. The foreign institutional investors (fiis) have emerged as noteworthy players in the indian stock market and their growing contribution adds as an important feature of the development of stock market in india.
To find out the whether fiis affect the indian stock market and indian economy, correlation has been calculated between closing index of fii and fii inflows correlation has been calculated for the data from. The fiis and stock returns are strongly correlated in indiabut, given the huge volume of investments, foreign investors could play a role of market makers and book their profits, ie they. 'impact of foreign portfolio investments on market investment market co movements: evidence from the emerging indian stock market' presented in the emerging market group esrc seminar on international equity markets comovements and contagion 11 may 2007 cass business school, london. This decline in fii investment in 200607 can be attributed to global developments like meltdown in global commodities markets and equity market during the three month period between may 2006 to july 2006, fall in asian equity markets, tightening of capital controls in thailand and its spill over effects.
Fii and stock market returns granger caused each other in the short span of time as well as in the long span of time kumar and tavishi (2012) analysed the dynamic and static relationship between the fii and the indian stock market returns using the data for a period of ten years ranging from 2000 to 2010. Portion of the daily traded value in indian exchanges the number of fiis registered with the securities and exchange board of india (sebi) increased steadily from 882 in march 2006 to 1757 in march 2013 on average, fiis accounted for approximately 20% of the total turnover at the national stock exchange of india (nse) over this period 3. Fiis made a record investment in the indian equity market in 2009, surpassing the 2007 inflows in india, fiis have a positive impact on the stock market, business transparency and.