Impact of Foreign Institutional Investors (FIIs) on Indian Capital Market

Abstract

FIIs are investors or an investment fund which are registered outside the country in which it is investing. It includes hedge funds, insurance companies, pension funds and mutual funds. It also includes banks, large corporate buyers or representatives of large institutions. Most developing economies have high volume of FIIs and these economies provide high growth potential than in developed economies. This study aims to find out whether there exists any significant relation between the Indian stock market (NSE-CNX NIFTY) and FII. We have used correlation to find out the extent of relationship between two variables and to validate the impact of FIIs on Indian Stock Market. We have further done some statistical analysis to find out the dominance of FIIs in Indian stock market. The paper concludes that FIIs affect the Indian stock market, and thus the Indian economy.