Fdi and Indian Stock Market
FDI AND INDIAN ST MARKET
Abstract—Unprecedented globalizations have witnessed double digit economic growth resulting in fierce competition and accelerated pace of innovation. As a result inflow of
Foreign Direct investments has become a striking measure of economic development in both developed and developing countries. FDI and FII thus have become instruments of international economic integration and stimulation.
Fast
growing economies like Singapore, China, Korea etc have registered incredible growth at onset of FDI. Though US captures most of the FDI inflows, developing countries still account for significant growth of FDI and rise in FII. FDI not only gives access to foreign capital but also provides domestic countries with cutting edge technology, desired skill sets, tools of innovation and other complementary skills. The policies drafted to stimulate the flow of foreign capital in to India provided much needed impetus for India to emerge as an attractive destination for foreign investors. External factors such as global economic cues, FDI & FII, Exchange rate and
Internal factors such as demand and supply, market cap, EPS generally drive and dictates the Indian stock market. The current paper makes an attempt to study the relationship and impact of FDI & FII on Indian stock market using statistical measures correlation coefficient and multi regression.
S ensex a nd N ifty w ere c onsidered a s t he r epresentative o f s tock m ar k et a s t hey a re t he m ost popular Indian stock market indices. Based on 11 years data starting from 2001 to 2011, it was found that the flow of
FDI & FII was moving in tandem with Sensex and Nifty. The study concludes that Flow of FDIs and FIIs in India determines the trend of Indian stock market.
Index Terms— FDI, FII, Sensex, Nifty, Impact
I. INTRODUCTION
Unprecedented globalizations have witnessed double digit economic growth resulting in fierce competition and accelerated pace of
Abstract—Unprecedented globalizations have witnessed double digit economic growth resulting in fierce competition and accelerated pace of innovation. As a result inflow of
Foreign Direct investments has become a striking measure of economic development in both developed and developing countries. FDI and FII thus have become instruments of international economic integration and stimulation.
Fast
growing economies like Singapore, China, Korea etc have registered incredible growth at onset of FDI. Though US captures most of the FDI inflows, developing countries still account for significant growth of FDI and rise in FII. FDI not only gives access to foreign capital but also provides domestic countries with cutting edge technology, desired skill sets, tools of innovation and other complementary skills. The policies drafted to stimulate the flow of foreign capital in to India provided much needed impetus for India to emerge as an attractive destination for foreign investors. External factors such as global economic cues, FDI & FII, Exchange rate and
Internal factors such as demand and supply, market cap, EPS generally drive and dictates the Indian stock market. The current paper makes an attempt to study the relationship and impact of FDI & FII on Indian stock market using statistical measures correlation coefficient and multi regression.
S ensex a nd N ifty w ere c onsidered a s t he r epresentative o f s tock m ar k et a s t hey a re t he m ost popular Indian stock market indices. Based on 11 years data starting from 2001 to 2011, it was found that the flow of
FDI & FII was moving in tandem with Sensex and Nifty. The study concludes that Flow of FDIs and FIIs in India determines the trend of Indian stock market.
Index Terms— FDI, FII, Sensex, Nifty, Impact
I. INTRODUCTION
Unprecedented globalizations have witnessed double digit economic growth resulting in fierce competition and accelerated pace of
References: April, pages 85-102. 2002. Emerald Group Publishing Limited. 2002. [5] Agarwal, R.N. (1997). “Foreign portfolio investment in some developing countries: A study of determin ants and macroeconomic [6] Chakrabarti, Rajesh. (2001). “FII Flows to India: Nature and Causes.” Money and Finance “Vol [7] Johnson Andreas “The Effects of FDI Inflows on Host Country Economic Growth”, 2004. Economics, 1(2), 181-189. 2009. International Research Journal of Finance and Economics, (42): 74 88. 2010. Prof. S Pardhasaradhi holds MBA from Osmania University (1989) and has obtained his doctorate in Faculty of Management from Osmania