CNX Nifty has always been a remarkable benchmark for the Indian Capital Markets. The common wisdom believes that the prestigious Index is driven predominantly by FII cash inflow. Since another common belief states that FIIs check valuation and invest on the basis of valuation rather than on gut feel, so in a way CNX Nifty movement should ideally are predicted by P/E, P/B &Div. Yield etc. The entire world had witnessed a stellar rally in the Indian bourses between 3 rd Jan 2007 to 2 nd Jan 2008;

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... that is the reason why that same time frame has been chosen in this study. Probabilistic neural Network (PNN) method is used this study, as it could replicate the human "Neuron" thinking quite well. This method allows the researcher with faster and accurate results. During that time zone FIIs Net Buys in Indian Securities were ₹ 9,480,196 MLN and the Net Sales were ₹ 8,389,304 MLN. So, effectively ₹ 1,090,892 MLN was Net investment. This was an all-time record that point of time. 1 In 2007 beginning FIIs were holding almost 16.3% of CNX Nifty. By the end of 2007 to the starting of 2008 they were holding 16.05% of the National Stock Exchanges' bellwether NSE 50 or Nifty. That clearly hints that despite reaching extraordinarily high valuation in Nifty, FIIs have not diluted their position. On the contrary they were holding or in other words consolidating their position in Nifty. At the same time, other participants too play a significant role.