Impact of FIIs Investment on Indian Stock Market: An Analysis

Author: S. K. Rastogi and Prince Kumar

Abstract:
Indian Stock Market is a hotspot of investment not only among the retail investors but also among Indian Institutional Investors and Foreign Institutional Investors since 1991, when PM Narsimha Rao government opened the door of Indian Economy to the global investors. The investment by Foreign Institutional Investors (FIIs) has become a dynamic force in the development of Indian stock market and a cause of stock market volatility. In the present study an attempt has been done to develop an understanding of the FIIs investment and its impact on stock market volatility. The study is conducted with the help of time series based on monthly closing data of NIFTY, SENSEX and FIIs activity over a period of twenty five years from January, 1994 to November, 2018. In this study, different statistical techniques such as Mean, SD, Coefficient of Variance Karl Pearsons’ Skewness and Correlation are used to test the impact of investment by FIIs on volatility of Indian stock market. The study reveals that FIIs investment has statistically significant influence on volatility of NIFTY and SENSEX, used as key indicators of Indian stock market.

Keywords:Volatility; FIIs Investment Trends; NIFTY; SENSEX; Indian Stock Market; and Correlation & Regression

DOI:

International Journal of Trade & Commerce (Vol: 7 Issue:2)