FOREIGN INSTITUTIONAL INVESTORS AND INDIA?S STOCK MARKET BEHAVIOUR.

The growing participation of Foreign Institutional Investors (FIIs) in Indian stock market has raised eyebrows of many Indians. Their influence on stock markets has been widely debated and remained a hot topic in the media. Being a developing country, India attracts a large sum of FII every year. Indian Stock Market, which is one of the indicators of the economic status, is also being affected by the foreign investments made. The FIIs have emerged as noteworthy players and provider of financial services in the Indian stock market whose contribution have added in the growth and development of the stock markets. The Indian Stock Markets have reached new heights and became more volatile making the researchers work in this dimension of establishing the link between FIIs and Stock Market volatility. This paper examines whether market movement can be explained by these investors and their impact on the stock markets. FIIs, because of its short-term nature can have bidirectional causation with the returns of other domestic financial markets. Thus, understanding the determinants of FII is very important for any emerging economy as it exerts a larger impact on the domestic financial markets. This paper is an attempt to find out the determinants of FIIs and their existing impact on the Indian Stock Markets and the Indian Economy as a whole.