Foreign Financial Investment Case Study

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3.1. Title of the Study TO STUDY IMPACT OF FOREIGN FINANCIAL INSTITUTIONS ON THE INDIAN STOCK MARKET 3.2. Statement Problem The Indian market has experienced a massive growth in its GDP in the past decade and is currently at its peak of 7.5%. In order for this trend to continue, the country requires a great deal of foreign capital in order to grow, develop and meet the objectives set by it. One way of attracting such finance is Foreign Institutional Investments. These foreign investments not only help in the growth but also contribute a lot to the movements of the stock market of the country receiving the inflows. The effect of the FIIs on the movements of the stock price can be both positive and negative. Thus, it is important to understand…show more content…
The study uses major market indicies like BSE Sensex, NSE Nifty, CNX Auto. CNX Bank, BSE Auto and BSE Bankex 3.4. Objectives 1. To study the impact of Foreign Institutional Investment on Indian stock market 2. To analyse the degree of impact of Foreign Institutions Investors have on the Indian stock market 3.5. Hypothesis The hypothesis used to conduct the study is as follows H0 - There is no significant influence between FII and BSE Sensex H1 - There is a significant influence between FII and BSE Sensex H0 - There is no significant influence between FII and NSE Nifty H1 - There is a significant influence between FII and NSE Nifty 3.6. Important Definitions Foreign Institutional Investment (FII) FII is the entry of funds into a country where foreigners deposit their money in some other country by making purchases in financial instruments like equity, debt and financial instrument. This kind of investment is highly liquid and volatile as investors are permitted to sell or buy stocks depending upon the market conditions. The investors typically hold short-term positions in financial assets of international markets. Gross Purchases Gross purchases indicate the daily/monthly/yearly aggregate of purchases of financial assets made by foreign portfolio investors in the…show more content…
Whereas major stock market indicies include the closing points of six major indicies since 1992. The major indicies is used as they are the set standard benchmark set by investors. The data collected are from reliable government recognized sources like SEBI Handbooks, BSE and NSE. However, the data involves a number of assumptions, which could be a possibility for drawbacks. Example: It is assumed that BSE Sensex points represents the entire country’s financial market and therefore compared with the total net investments of various years 3. Sampling Plan The sample used to conduct the study comprises of FII flows in the country and major indices closing points. Major Idiocies closing points include BSE Sensex, NSE Nifty, CNX Auto, BSE Auto, CNX Bank and BSE Bankex as they are the most popular indices and most popularly used by people for benchmarking. The data collected is from 1992 to 2015. The sample is yearly data of FII flows and major indices points. They are considered to be a representation for the entire country because of the ease of collecting data and its reliability. 4. Statistical tools

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