IMPACT OF FOREIGN INSTITUTIONAL INVESTORS ON INDIAN STOCK MARKET (BSE SENSEX)

Abstract

Indian stock market is an attractive investment destination for the foreign investors. From the past it had been growing steadily and had allured foreign investor as well as domestic investors. In the Indian stock market major part of investment is attributed by the institutional investors among them foreign institutional investors (FIIs) are of primary importance. The major concern in this matter is that whether FIIs regulate the Indian stock market or vice-versa. This project examines whether movement in market can be explained by these investors or not. FIIs are short-term nature, and may impact the returns of other domestic financial markets such as money markets, stock markets, and foreign exchange markets. Foreign institutional investors (FIIs) exerts moderate impact on domestic financial market in short run and real and large impact on long run, so understanding of FIIs is very important for any emerging economy. The objective of the study is to find out the relationship and variation between FII and Indian stock market (especially BSE Sensex) using statistical measures such as linear regression, correlation coefficient, t-test and F-test.The data for the study uses the information obtained from the secondary resources like website of BSE Sensex and SEBI.