The Impact of FII Investment on Indian Stock Market Return

Abstract

FIIs have been the backbone of the Indian stock market for the past few years and the sole reason for the buoyancy of the Indian equity market. Even a few additional hundred dollars invested by FIIs have lifted the market to greater heights, improving the market sentiment. With FIIs making a U-turn in June many feel the dream-run for India and the Indian market is over. The bleak GDP growth and industrial production growth make matters worse. Until now, as the saying goes ‘their pain was our gain.’ The crisis in West Asia and Europe came as a breather for India earlier. Meanwhile both Bank of England (BOE) and European Central Bank (ECB) have kept rates unchanged. In fact both the BOE and the ECB have been assuring their economies that they are willing to keep rates low for a considerable period of time. This research paper is mainly to analyze the cause and effect relationship between the FIIs investment and stock market for the period 2002 to 2012.

Keywords

• fii
• gdp
• bse sensex