AN EMPIRICAL STUDY ON FOREIGN INSTITUTIONAL INVESTORS' INVESTMENT TRENDS AND ITS IMPACT ON BSE SENSEX

Devdatt Vyas, Manoj Shah
2015 International Journal of Management and Social Science Research Review   unpublished
Foreign institutional Investors are the investors who brings investment fund which are from or registered in a country outside of the one in which it is currently investing. In this research study, it is an attempt made to describe or moreover explain the impact and extent of foreign institutional investors in Indian Stock Market. In General meaning of foreign institutional investors are referred to outside companies or firms investing in the financial or capital market of India. Foreign
more » ... dia. Foreign Institutional Investors must register themselves with the Securities and Exchange Board of India (SEBI) to make participation in the capital market. One of the major market regulations pertaining to Foreign Institutional Investors involves placing limits on Foreign Institutional Investors ownership in Indian Companies. They can make investment in a portfolio of shares and deposits. Foreign Institutional Investors invest their major source of money in the issue of Participatory Notes (P-Notes), or which is sometimes called Offshore Derivatives. There are nearly 1484 Foreign Institutional Investors and more than 38 Foreign Brokers registered to Securities and Exchange Board of India (SEBI). In this present paper we probe into relationship between capital market movement and these investors, we often hear that whenever there is a rise in stock market, it is due to Foreign Institutional Investors' investment and there is a decline in stock market, it is due to withdrawal of money by Foreign Institutional Investors. Foreign Institutional Investors had faced severe liquidity problems or crunch at the time of sub-prime crisis and other financial or economical crisis at a global level, so they are forced to withdraw their money from Indian Capital Market, so as to repay loans and advances they had taken, and due to these withdraws of investment, it had created panic in the capital market and even domestic investors were sell their shares. But we should agree on one aspect that increased role of foreign Institutional Investors had changed the look of Indian Stock Market. It has brought both the type of changes i.e., qualitative and quantative. The role of Foreign Institutional Investors had also increased the breadth and depth of Indian Capital Market.
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