FII Flows and Indian Capital Market: A Periodically Comparative Study on NSE Nifty Sectoral Indices

Stock market plays a vital role in growth and development of a country and also acts as a most important pillar of an economy. This research attempts to investigate the relationship and influence of FII on the National Stock Exchange’s sectoral market indexes. To check the stationarity of the series ADF is used while regression is used to find out the impact of FIIs on the sectors of NSE. To measure the causality between the two, Granger causality test is applied. A comparative analysis of monthly and quarterly data has been done from 2006 to 2020. The paper concluded that FIIs is having significant relationship with sectoral indices. The Granger causality test found that FIIs have unidirectional causality relationship with energy, financial services, Infrastructure and MNC and no causal relationship with Bank, India consumption, Metal, PSE, and service sector using quarterly data.