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Impact of the Foreign Institutional Investments on Stock Market: Evidence from India

Author

Listed:
  • GARG, ASHISH

    (Lal Bahadur Shastri Institute of Management, New Delhi, India)

  • BODLA, B. S.

    (Kurukshetra University, Kurukshetra, Haryana, India)

Abstract

The present study is an attempt to determine the impact of Foreign Institutional Investments (FIIs) on Indian stock market as India has emerged as one of the most attractive investment destinations in Asia. To achieve the above objective, the study has utilized the daily data on stock market index (Sensex), FII flows and other related variables for a period of 22 years ranging from January 1986 to December 2007. The study has used combined regression time series model and GARCH Model for determining the impact of FIIs on share market return and volatility, respectively. The results show that volatility of Indian stock market as well as its return has declined after opening the stock market for FIIs.

Suggested Citation

  • Garg, Ashish & Bodla, B. S., 2011. "Impact of the Foreign Institutional Investments on Stock Market: Evidence from India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 46(2), pages 303-322.
    • Handle: RePEc:dse:indecr:0040
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    Citations

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    Cited by:

    1. Paramita Mukherjee & Sweta Tiwari, 2022. "Trading Behaviour of Foreign Institutional Investors: Evidence from Indian Stock Markets," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 29(4), pages 605-629, December.
    2. Kapil Choudhary & Parminder Singh & Amit Soni, 2022. "Relationship Between FIIs’ Herding and Returns in the Indian Equity Market: Further Empirical Evidence," Global Business Review, International Management Institute, vol. 23(1), pages 137-155, February.

    More about this item

    Keywords

    ARMA. GARCH; Foreign Institutional Investments (FIIs); Volatility; Stock Market; Indian Stock Market; BSE Return;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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