A

STUDY ON
IMPACT OF INVESTMENT BY FOREIGN INSTITUTIONAL
INVESTORS IN INDIAN CAPITAL MARKET
Dissertation Submitted In Partial Fulfillment of Requirements for the Award of the
Degree of
MASTER OF BUSINESS ADMINISTRATION
OF
BANGALORE UNIVERSITY
By

SAFEER AHMED. N. K
Reg. No. 11CQCMA120
Under The Guidance Of
SHALINI. R
Asst.Professor

DAYANANDA SAGAR COLLEGE OF MANAGEMENT

& INFORMATION TECHNOLOGY
Shavige Malleshwara Hills, Kumaraswamy Layout, Bangalore-560078
Bangalore University
Bangalore 201113

GUIDE CERTIFICATE

This is to certify that the Dissertation titled IMPACT OF INVESTMENT BY

FOREIGN INSTITUTIONAL INVESTORS IN INDIAN CAPITAL MARKET
submitted in partial fulfillment of the requirements for the award of degree of
Master of Business Administration to Bangalore University is a record of original
work carried out by SAFEER AHMED N.K. (Reg. No 11CQCMA120) under my
supervision and guidance and that no part of this report has been submitted for
awards of any degree/ diploma/ certificate.

Place: Bangalore

Mrs. SHALINI R.
Asst. Professor

Date:

STUDENT DECLARATION

I hereby declare that the Dissertation titled IMPACT OF INVESTMENT BY

FOREIGN INSTITUTIONAL INVESTORS IN INDIAN CAPITAL MARKET is an
original work done by me, submitted in partial fulfillment of the requirements for
the award of degree of Master of Business Administration to Bangalore University,
under the guidance of Mrs. SHALINI R (Asst.Professor) This has not been
submitted to any other university or institution for the award of any degree/
diploma/ certificate.

Place: Bangalore

SAFEER AHMED N.K

(Reg.No.11CQCMA120)

Date:

CERTIFICATE
This is to certify that the Project titled Dissertation titled IMPACT OF
INVESTMENT BY FOREIGN INSTITUTIONAL INVESTORS IN INDIAN
CAPITAL MARKET submitted in partial fulfillment of the requirements for the
award of degree of Master of Business Administration to Bangalore University, is
a record of original work carried out by SAFEER AHMED N.K
(Reg.No.11CQCMA120) under the guidance of SHALINI R (Asst Prof) during the
academic year 2011-2013.
This has not been submitted to any other university or institution for the award of
any degree/ diploma/ certificate.

Dr. DINAKAR G.
Head-MBA, DSCMIT
Place: Bangalore
Date:

Dr. N. SURESH
Director - DSCMIT

ACKNOWLEDGEMENT
Gratitude is the best remuneration
At the outset, thank God almighty for making my endeavor a success.
I thank the unseen power guided me throughout my ways, which had lots of
troubles and peril to overcome.
I express my heartfelt thanks and deep sense of gratitude to Dr. N. SURESH the
Director (MBA, BU) of DAYANANDA SAGAR COLLEGE, BANGALORE, and Dr.
DINAKAR G, Head of the Department (MBA BU) of DAYANANDA SAGAR

COLLEGE, BANGALORE for granting me permission to do this project and

extending all his help and support.
With deep respect I express my sincere gratitude towards my project guide Mrs.
SHALINI R for her valuable comments and guidance throughout my project.

I express my heartfelt thanks to all the faculties of the Department of

Management Studies, DAYANANDA SAGAR COLLEGE BANGALORE, for their
instant help and guidance throughout my project.
I also express my sincere gratitude towards my parents and friends who
supported and encouraged me for the successful completion of the project.

SAFEER AHMED N.K

(Reg.No.11CQCMA120)

CERTIFICATE OF ORIGINALITY

This is to certify that the Dissertation titled " IMPACT OF INVESTMENT BY

FOREIGN INSTITUTIONAL INVESTORS IN INDIAN CAPITAL MARKET is an
original work of the student and is being submitted in partial fulfilment for the
award of the Master's Degree in Business Administration of Bangalore University.
The report has not been submitted earlier either to this University /Institution for
the fulfilment of the requirement of a course of study.

SIGNATURE OF SUPERVISOR

SIGNATURE OF STUDENT

Place:
Date:

TABLE OF CONTENTS

Sl No.

Sub Sl No.

CHAPTER

Page No.

1
1.1
1.2
1.3
1.4
1.5
1.6
2
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
3
3.1
3.2
3.3
3.4
4
4.1
4.2
4.3
4.4
4.5
5

FOREIGN INSTUTIONAL INVESTOR

Introduction
Foreign Institutional Investment In India: An Overview
Forms of Foreign Investment
Indian Context Of Foreign Institutional Investment
Eligibility for registration as FII
Influence Of FII Flows On Indian Stock Market
REVIEW OF LITERATURE & RESEARCH DESIGN
Purpose Of Literature Review
Review of literature
Statement Of The Problem
Scope of study
Objectives of study
Operational Definitions of Concept
Source of data
Limitations of study
Chapter scheme
PROFILE OF THE INDUSTRY OR ORGANISATIONS
Reserve Bank Of India
Securities & Exchange Board Of India
Bombay Stock Exchange (Bse).
National Stock Exchange (Nse)
RESULTS ANALYSIS & DISCUSSIONS
FII Investment Trend
FII Investment Trend In India
Indian Benchmarks & FIIs
GDP Slows, FII Grows
Top 10 Business Sectors In India
SUMMARY OF FINDINGS, CONCLUSION &
SUGGESTIONS
Summary of findings
Conclusion
Suggestions
BIBLIOGRAPHY
ANNEXURE

TABLES & CHARTS

1-31
1
2
13
17
19
30
32-52
32
32
44
44
44
45
50
50
51
53-69
53
54
57
63
70-91
70
70
71
84
85
92-101
92
96
97
100
101

Sl. No.

TABLES

Page no.

FII Investment Trend In India

70

FII Sectorial Investment2012

73

FII Investments Equity & Debt

77

Foreign Exchange Reserve

80

Indian GDP Growth Rate

82

Number Of Registered FII In India

88

India Leads In FII Inflows In Asia

90

CHARTS
1

FII Investment Trend In India

71

FII Sectorial Investment2012

73

FII Investments Equity & Debt

78

Foreign Exchange Reserve

80

Indian GDP Growth Rate

82

Number Of Registered FII In India

88

India Leads In FII Inflows In Asia

90

ABSTRACT

The report examines the IMPACT OF INVESTMENT BY FOREIGN INSTITUTIONAL

INVESTORS IN INDIAN CAPITAL MARKET. The scope of the research comprises of
information derived from secondary data from various websites of BSE, NSE, Money control,
RBI and SEBI. SENSEX and Nifty was a natural choice for inclusion in the study, as it is the
most popular market indices and widely used by market participants for benchmarking.
In this research an effort has been made to develop an understanding of the influence of the
FIIs in the Indian capital market. The foreign institutional investors (FIIs) have emerged as
important players in the Indian equity market in the recent past. This report makes an attempt
to understand whether there exists a relationship between FII and Equity Market returns in
India and in this study over 20 years data has been discussed. It is a generalized report on the
trends in the foreign investment flow in India, with an attempt to explain and project the reasons
behind India being amongst the favorites.
This report talks more about the foreign institutional investment and Indian markets. This report
provides a preliminary analysis of FII flows to India and their influence on the prices of stocks in
the Indian capital market. A more detailed study using daily data of equity returns for a longer
period or better still disaggregated data showing the transactions of individual FIIs at the stock
level can help address questioning regarding the extent of herding or return chasing behavior
among FIIs which now account for a significant part of the capital account balance in our
balance of payments. The extent of which FII participation in Indian markets has helped lower
cost of capital to Indian industries is also an important issue to investigate. A detailed
understanding of the nature and determinants of FII flows to India would help us address such
questions in a more informed manner and allow us to better evaluate the risks and benefits of
foreign portfolio investment in India.

CHAPTER: 1
INTRODUCTION

CHAPTER: 2
REVIEW OF
LITERATURE &
RESEARCH
DESIGN

CHAPTER: 3
PROFILE OF THE
INDUSTRY

CHAPTER: 4
RESULTS,
ANALYSIS
& DISCUSSIONS

CHAPTER: 5
SUMMARY OF
FINDINGS

CONCLUSION

SUGGESTIONS

ANNEXURE

BIBLIOGRAPHY