Volume : IV, Issue : V, May - 2015

A Study of Foreign Institutional Inflows and Indian Stock Market Volatility

Dr. Kajal Gandhi

Abstract :

 It is observed that a significant amount of capital is flowing from developed economies to emerging economies.  It has been seen that the foreign institutional investments have played a dynamic role in emerging economies. The  liberalization process undertaken by the government of India in early 1990s have ought about significant changes in the structure and  functioning of the Indian stock market. One of the important policy measures included the allowance of foreign institutional investors in the  Indian stock market in 1992. Entry of these FIIs has truly helped to change the face of Indian stock market. Positive fundamentals, gradual  removal of structural barriers combined with fast growing markets have made India an attractive destination for foreign institutional investors. Today, FIIs are the key drivers of the Indian equity market and rising stakes in Indian companies. The volatility of the market which has  been ought in by FIIs cannot be neglected in this regard. The increase in the volume of foreign institutional investment (FII) inflows in recent  time has led to concerns regarding the volatility of these flows, threat of capital flight, its impact on the stock markets and influence of changes  in regulatory regimes. In this paper using granger’s causality test it is revealed that FIIs granger causes the volatility in Indian stock market.

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Article: Download PDF   DOI : 10.36106/ijsr  

Cite This Article:

Dr. Kajal Gandhi A Study of Foreign Institutional Inflows and Indian Stock Market Volatility International Journal of Scientific Research, Vol : 4, Issue : 5 May 2015

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