RELATIONSHIP BETWEEN THE FIIS INVESTMENT AND INDIAN STOCK MARKET

For making selection investment in India, one should be registered either as a
foreign institutional investor (FII) or as one of the sub-accounts of one of the
recorded FIIs. Both registrations are granted by the market regulator, SEBI.
Foreign institutional investors mainly consist of mutual funds, pension funds,
endowments, sovereign wealth funds, insurance companies, banks, asset
management companies etc. Foreign institutional investors and their sub accounts
can invest directly into any of the stocks listed on any of the stock exchanges. Most
portfolio investments consist of investment in securities in the primary and
secondary markets, including shares, debentures and warrants of companies listed
or to be listed on a recognized stock exchange in India. An FII registered as a debtonly
FII can invest 100% of its investment into debt instruments. Other FIIs must
invest a minimum of 70% of their investments in equity. The balance of 30% can be
invested in debt. Aims Of this paper are 1. To find out the impact of FII on Indian
capital market, 2. To determine the behaviour and trend of FII’s on Indians tuck
market, 3. To determine the factors the influence investment decision of FII’s, 4.To
find out the relationship between the FIIs investment and Indian stock market, 5. To
examine the correlation if any exists between the FII net equity flow and nifty, by
using Linear Regression & Correlation.