IMPACT OF FOREIGN INSTITUTIONAL INVESTMENT ON INDIAN STOCK MARKET

ABSTRACT The economic liberalisation process has been opened up new dimensions for the Indian economy since 1991. The liberalisation process has achieved new heights and changes in the structure and functioning of the Indian stock market. Foreign capital is flowing from developed countries to developing countries, and it has been the foreign institutional investors have played a vital role in the Indian stock market. FIIs have been allowed to invest in the domestic financial market since 1992. The FIIs has influenced the several factors such as stock market, money market and foreign exchange markets. The objective of this analysis is to study the impact of foreign institutional investment on the Indian stock market. The study attempted to analyse the growth and share of foreign institutional investment in the Indian economy. The study identifies the following variables viz., the annual growth rate of foreign institutional investment and stock market such as BSE and NSE during the period from 1990-91 to 2017-18. The study obtained data from the Foreign Portfolio Investment Monitor by National Securities Depository Limited and Handbook of Statistics on Indian Securities Market for various issues. For analyse, the study also uses the annual growth rate, unit root test, co-integration and Granger causality test. Key Words: FII, Turnover at BSE and Turnover at BSE