Institutional Investors

A Study on
IMPACT OF INSTITUTIONAL INVESTORS

ON NIFTY VOLATILITY
WITH SPECIAL REFERENCE TO FII AND MF FLOWS
Dissertations submitted in partial fulfillment of the requirements for the

Award of the Degree of
MASTER OF BUSINESS ADMINISTRATION
By
Ravi Kumar.s
Reg.No.05JJCM6041
Under Guidance of
Dr. MADHUMITA.G.MAJUMDER
KRISTU JAYANTI COLLEGE OF MANAGEMENT

K.NARAYANAPURA, BANGALORE-77
2005-2007
1
DECLARATION
I hereby declare that this project titled “Impact of Institutional Investors on Nifty
Volatility With Special Reference to FII and MF Flows” submitted by me to
Department of Management, Bangalore University in partial fulfillment of requirements
of MBA Programme is a bonafide work carried by me under the guidance of.
Dr.Madhumita. G. Majumder
This has not been submitted earlier to any other University or Institution for the award of
any degree diploma/ certificate or published any time before.
Place: Bangalore (RAVI KUMAR.S)
Date:
2
CERTIFICATE FROM GUIDE & HEAD OF THE INSTITUTION
Certified that this project entitled “Impact of Institutional Investors on Nifty
Volatility With Special Reference to FII and MF Flows” submitted in partial

fulfillment for the award of MBA Degree of Bangalore University was carried out by
Mr.Ravi kumar.S under the guidance of Dr.Madhumita. G. Majumder. This has not
been submitted to any other university or institution for the award of any degree/
diploma/ certificate.
GUIDE DEAN
MBA DEPARTMENT
PRINCIPAL
3
ACKNOWLEDGEMENT
At the successful completion of my project I would like to extend my gratitude to all
those without whose valuable guidance and support it would have not been possible.
A special word of thanks to Dr. Arun Kumar (Dean of MBA Department) for his
guidance and support throughout the project work.
I also owe my gratitude to my internal guide Dr.Madhumita. G. Majumder (Professor,
Kristu Jayanti College of Management) for valuable suggestions and guidance.
Above all I thank my family and friends for their constant support and encouragement.
4
TABLE OF CONTENTS
CHAPTER NO. TITLE PAGE

NO.
1 1-4
INTRODUCTION
Introduction
Subject background of the Research Topic
2 RESEARCH DESIGN 5-10
Introduction
Statement of Problem
Review of Literature
Objectives of the Study
Scope of the Study
Hypothesis
Operational Definitions
Methodology
Data Collection
Tools used for Analysis
Limitations of the Study
3 PROFILE 11-34
4 ANALYSIS OF IMPACT OF 35-46

INSTITUTIONAL INVESTORS
ON NIFTY VOLATILITY
WITH SPECIAL REFERENCE TO FII AND
MF FLOWS
5 SUMMARY OF FINDINGS, CONCLUSION AND 47-49

RECOMMENDATIONS
BIBLIOGRAPHY AND ANNEXURES
5
LIST OF TABLES
Table No. Title Page No.
4(a) Correlation analysis for the time period of 35

1/4/2004 to 30/6/2004
4(b) Correlation analysis for the time period of 36
1/7/2004 to 30/9/2004
4(c) Correlation analysis for the time period of 36
1/10/2004 to 30/12/2004
4(d) Correlation analysis for the time period of 37
1/1/2005 to 30/3/2005
4(e) Correlation analysis for the time period of 37
1/4/2005 to 30/6/2005
4(f) Correlation analysis for the time period of 38
1/7/2005 to 30/9/2005
4(g) Correlation analysis for the time period of 38
1/10/2005 to 30/12/2005
4(h) Correlation analysis for the time period of 39
1/1/2006 to 30/3/2006
4(i) Correlation analysis for the time period of 39
1/4/2006 to 30/6/2006
4(j) Correlation analysis for the time period of 40
1/7/2006 to 30/9/2006
4(k) Correlation analysis for the time period of 40
1/10/2006 to 30/12/2006
4(l) Correlation analysis for the time period of 41
1/1/2007 to 30/3/2007
4(m) Over all correlation analysis 42
LIST OF GRAPHS
Graph no. Title Page no.

4(a) Net FII investment 45
4(b) Net MF investment 46
6
EXECUTIVE SUMMARY
The Indian stock market though one of the oldest in Asia being in operation since 1875,
remained largely outside the global integration process until the late 1980s. In line with
the global trend, reform of the Indian stock market began with the establishment of
Securities and Exchange Board of India in 1988. Among the significant measures of
integration, portfolio investment by FIIs allowed since September 1992, has been the
turning point for the Indian stock market. As of now FIIs are allowed to invest in all
categories of securities traded in the primary and secondary segments and also in the
derivatives segment.
The process of integration received a major impetus when the Indian corporate was
allowed to go global with GDR / ADR issues. Starting with the maiden issue of Infosys
in March 1999, ADR issues has emerged as the star attraction due to its higher global
visibility. Thus, the Indian stock market, which was in isolation until recently, turns out
to have been sensitive to developments in the rest of the world by the end of the 1990s.
The dissertation work aims to study the impact of Institutional Investors on the Nifty.
Even though there are several institutional investors, only the FII and MF operations are
considered. The other institutional investors do not participate actively in the stock
market because of various restrictions.
The analysis of the data is done by taking daily net inflows of FII and MF. These inflows
are compared with the daily Nifty closing prices.
The important finding from this study is that Nifty is influenced by the FII inflows to a
considerable extent. The mutual funds are not actively participating in the index stocks. A
larger portion of the equity fund investment of mutual fund is seen in the non-index and
midcap sector. This means that FII are playing in the index and blue chip stocks and
mutual funds in non-index and midcap sector.
The domestic institutional investors have to play an active role in the stock market so as
to bring the stability in the stock market. The stability of the stock market is important
indicator of the economic development.
7
CHAPTER 1
INTRODUCTION
1.0 INTRODUCTION
India, among the European investors, is believed to be a good investment despite political
uncertainty, bureaucratic, hassles, shortages of power and infra-structural deficiencies.
India presents a vast potential for overseas investments and is actively encouraging the
entrance of foreign players into the market. The FIIs have played a key role in the Indian
Financial Market since their entry into the country in the early 1990’s. The last few years
have seen this importance growing substantially as the robustness of the Indian Economy
level more and more overseas investors in the Indian Economy.
• FOREIGN INSTITUTIONAL INVESTORS
The term Foreign Institutional Investor is defined by SEBI as under:

"Means an institution established or incorporated outside India which proposes to make
investment in India in securities. Provided that a domestic asset management company or
domestic portfolio manager who manages funds raised or collected or brought from
outside India for investment in India on behalf of a sub-account, shall be deemed to be a
Foreign Institutional Investor."
• SUB ACCOUNT
Sub-account" includes those institutions, established or incorporated outside India and

those funds, or portfolios, established outside India, whether incorporated or not, on
whose behalf investments are proposed to be made in India by a Foreign Institutional
Investor.
• MUTUAL FUNDS
8
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned through
these investments and the capital appreciation realized is shared by its unit holders in
proportion to the number of units owned by them. Thus a Mutual Fund is the most
suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost. The flow
chart below describes broadly the Working of a mutual fund.
The money thus collected is then invested by the fund manager in different types of
securities. These could range from shares to debentures to money market instruments,
depending upon the scheme's stated objective. The income earned through these
investments and the capital appreciation realized by the scheme is shared by its unit
holders in proportion to the number of units owned by them. Thus a Mutual Fund is the
most suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost.
• NATIONAL STOCK EXCHANGE
• The Organization
The National Stock Exchange of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which recommended
promotion of a National Stock Exchange by financial institutions (FIIs) to provide access
to investors from all across the country on an equal footing. Based on the
recommendations, NSE was promoted by leading Financial Institutions at the behest of
the Government of India and was incorporated in November 1992 as a tax- Paying
company unlike other stock exchanges in the country.
9
On its recognition as a stock exchange under the Securities Contracts (Regulation) Act,
1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The Capital Market (Equities) segment commenced operations in
November 1994 and operations in Derivatives segment commenced in June 2000.
S&P CNX Nifty
The S&P prefix belongs to the US-based Standard & Poor's Financial Information
Services. S&P owns the most important index in the world, the S&P 500 index, which is
the foundation of the largest index funds and most liquid index futures markets in the
world.
When S&P came to India to look at market indices, they focused upon the S&P CNX
Nifty as opposed to alternative indices. They now stand behind the S&P CNX Nifty, as is
evidenced by the name "S&P CNX Nifty"
CNX stands for CRISIL NSE Indices. CNX ensures common branding of indices, to
reflect the identities of both the promoters, i.e. NSE and CRISIL. Thus, 'C' stands for
CRISIL, 'N' stands for NSE and X stands for Exchange or Index.
1.1 BACKGROUND OF THE STUDY
The financial markets have expanded and deepened rapidly over the last ten years. The
Indian capital markets have witnessed a dramatic increase in institutional activity and
more specifically that of FII’s. This change in market environment has made the market
more innovative and competitive enabling the issuers of securities and intermediaries to
grow.
In India the institutionalization of the capital markets has increased with FII’s becoming
the dominant owner of the free float of most blue chip Indian stocks. Institutions often
trade large blocks of shares and institutional order’s can have a major impact on market
volatility. In smaller markets, institutional trades can potentially destabilize the markets.
10
Moreover, institutions also have to design and time their trading strategies carefully so
that their trades have maximum possible returns and minimum possible impact costs.
Some studies do examine the trading strategies and price impact of foreign institutional
trades; however, the scope is often limited to a single country. This study takes a look at
the impact of FII cash flows on Index volatility in India. FIIs are the largest investors in
the Indian stock market. But the common perception that domestic investors lack market-
moving influence is not entirely based on fact. If one considers the transactions by
domestic mutual funds (MFs) in the equity market an indicator of domestic investor
participation in the stock market, domestic investors have been active participants in
recent times.
For the study purpose the daily volatility in cash flows of FII’s were analyzed in relation
to the daily volatility in the National Stock Exchange of India benchmark Index (NIFTY)
from April 2004 to March 2006. This was done using Correlation analysis and
Regression Analysis.
• HISTORY OF FOREIGN PORTFOLIO INVESTMENT
FPI was traditionally been concentrated in developed markets. But now it has been
shifting to the new merging capital markets. The emerging markets have at least three
attractive qualities, two of which are their high average returns and their low correlation
with developed markets. Diversification into these markets is expected to give higher
expected returns and lower overall volatility.
Many individual investors, as well as portfolio and pension fund managers, are re-
examining their basic investment strategies. During the 1990s, fund managers realized
that significant performance gains could be obtained by diversifying into high-quality
global equity markets. These gains are limited, however, by the fairly high cross-
correlations returns in these markets.
11
CHAPTER 2
RESEARCH DESIGN
2.0 INTRODUCTION
Research refers to the search for the knowledge. One can also define research as a
scientific, systematic search for the actual information on a specific topic. In fact,
research is an art of scientific investigation. “A careful investigation or enquiry specially
through search for new fact in any branch of knowledge.”
2.1 STATEMENT OF THE PROBLEM
The stock market is influenced by many factors. Both institutional and individual
investors have a critical role to play in the stock market. The volatility in the market is the
result of buying and selling pressure on the stocks. The excessive buying pressure results
in the bull market and the excessive selling pressure result in bear market. Under this
circumstance it may be useful to study the impact of institutional investors on the market.
This study basically aimed at studying the influence of FII and mutual Fund on one of the
premier stock exchange of India, NSE India.
2.2 NEED FOR THE STUDY
The need of the study is to know how FII’s and MF Inflows affects the volatility of Nifty
in Capital Market. From this we can say that the following are the need and importance
for the study:
• To determine the volatility of NSE.
• To judge the progress of FII’s and MF Inflows.
• To know the daily trend of FII and MF Inflow activities.
12
2.3 REVIEW OF LITERATURE
The secondary data are used for the entire dissertation work and the source of the
information is Internet, Articles and Financial Magazines. Apart from the above
information few books and projects reports has been referred for the literature.
The literature review provided the information required for the successful completion of
the project. Various information is obtained from different sources:
1 www.nseindia.com
2 www.indiainfoline.com
3 www.mutualfundsindia.com
4 www.financialcertified.com
5 “International Business” by Eun & Rusnik
6 Business World Magazine.
7 “ICFAI Applied Finance Journal.
2.4 OBJECTIVES
1. To study the investing strategy of FII and MF in Indian capital.
2. To analyze the impact of FII and MF on volatility of NSE.
3. To offer suitable suggestions to overcome the loopholes and slow growth of FII
and MF.
2.5 SCOPE OF THE STUDY
The scope of the study is limited only to NSE Nifty. The study includes testing the
impact of Institutional Investors only on NSE Nifty. The scope of the study is limited
only to two institution investors namely FIIs and MFs. The other institutional investors
have not been considered in the study, as they do not participate actively in the stock
market because of various restrictions imposed on their operations.
2.6 HYPOTHESIS
13
A hypothesis is a supposition made as a basis for reasoning. All scientific theories are
tested for setting up a hypothesis against data of observation. The hypothesis is done
based on the Secondary data collected from various financial sites, Magazines and
Journals.
Hypothesis 1
Ho: “There is a significant impact of FII Cash flows on the stock market volatility”
H1: “There is no significant impact of FII Cash flows on the stock market volatility”
Hypothesis 2
Ho: “There is a significant impact of MF flows on the stock market volatility”
H1: “There is no significant impact of MF flows on the stock market volatility”
2.7 OPERATIONAL DEFINITIONS
VOLATILITY
Volatility is a measure of the range of an asset price about its mean level over a fixed
amount of time. It follows that volatility is linked to the variance of an asset price.
• FOREIGN INSTITUTIONAL INVESTOR

• MUTUAL FUNDS
14
A security that gives small investors access to a well-diversified portfolio of equities,
bonds, and other securities.
• NATIONAL STOCK EXCHANGE
NSE has a fully automated, electronic, screen-based trading system, which provides
nation wide equal access and fair, efficient, completely transparent securities trading
system to investors by using suitable communication network.
GLOBAL DEPOSITARY RECEIPTS
A negotiable certificate held in the bank of one country representing a specific number of
shares of a stock traded on an exchange of another country.
• AMERICAN DEPOSITARY RECEIPS
A negotiable certificate issued by a US bank representing specific number of shares of a

foreign stock traded on a US stock exchange.
2.8 METHODOLOGY
Methodology states that how the research studies should be undertaken. This includes the
design specifications, sources of data, methods of primary data collection, methods used
for collecting secondary data etc. Mainly secondary data has been used for the study.
Secondary data consists of collecting information from various financial sites. It includes
the records and reports of research experts. For analysis and interpretation statistical tools
are used.
The main intention of the study is to know the criteria of FII’s and MF Inflows in Indian
Capital Market and their impact on NSE volatility. In order to make study feasible and to
15
carry out the study systematically and scientifically statistical tools are developed. The
study involves:
 The information about daily FII’s and MF Inflows were colleted from various
financial sites.
 Review of different year’s data, financial journals and operational statistics for
collecting the data.
2.9 DATA COLLECTION

The data is collected from secondary sources. The following are the sources:
1 Books and Journals: Tools used for Analysis purpose.

2 Internet Websites:
o www.nseindia.com
o www.indiainfoline.com
o www.myiris.com
o www.mutualfundsindia.com
o www.financialcertified.com
o www.il&fs.com
2.10TOOLS USED FOR ANALYSIS
Technique used:
Correlation analysis.
Statistical tools used:
SPSS worksheet.
16
2.11 LIMITATIONS OF THE STUDY
1 The study is confined to FII’s and Mutual Fund Investments in the Stock Market.
It does not include other indicators, which affects the Capital Market.
2 The study is based on the daily closing of price of nifty index.
3 Most of the information gathered for the study is from Internet and magazines etc.
that are in the printed from. Hence, the level of accuracy cannot be expressed to
be 100 per cent.
17
CHAPTER 3
PROFILE
3.0 INSTITUTIONAL INVESTORS
A non-bank person or organization that trades securities in large enough share quantities
or dollar amounts that they qualify for preferential treatment and lower commissions is an
institutional investor. Institutional investors face less protective regulations because it is
assumed that they are more knowledgeable and better able to protect themselves.
• INSTITUTIONAL INVESTORS
1. Foreign Institutional Investors

2. Mutual Funds
3. Financial Institutions
4. Insurance Companies
5. Banks
3.1 HISTORY OF FOREIGN PORTFOLIO INVESTMENT
FPI was traditionally been concentrated in developed markets. But now it has been
shifting to the new merging capital markets. The emerging markets have at least three
attractive qualities, two of which are their high average returns and their low correlation
with developed markets. Diversification into these markets is expected to give higher
expected returns and lower overall volatility.
Many individual investors, as well as portfolio and pension fund managers, are re-
examining their basic investment strategies. During the 1990s, fund managers realized
that significant performance gains could be obtained by diversifying into high-quality
global equity markets. These gains are limited, however, by the fairly high cross-
correlations returns in these markets.
18
Broadly speaking, there are six groups of investors in the emerging markets, each having
a tolerance for different risk and return:
1. Domestic residents of developing countries with overseas holdings and other private
foreign investors, who constitute the dominant category of portfolio investors who are
currently active in the major emerging markets. These investors keep abreast of
developments in their country on a regular basis and monitor change in government
policy. Their investments in emerging markets are motivated by expected short-term
yields. Preference is given to instruments that are in bearer form and provide returns
in hard currency.
2. Managed Funds (closed-end country funds and mutual funds), whose portfolio
managed buy and sell shares and high-yield bonds in one or mare of the emerging
markets for performance-based trading purposes.
3. Foreign banks and brokerage firms, who allocate their portfolio for inventory and
trading purpose.
4. Retail clients of Eurobonds houses who are involved in emerging securities markets
due to portfolio diversification motives. They are generally interested in high-yield,
high-risk portfolio investment in the emerging markets.
5. Institutional Investors (such as pension funds, life insurance companies) who have a
longer time horizon for expected gains from their portfolio and look for stability and
long term growth prospects in the market in which they invest.
6. Non-resident nationals of developing countries, who could be a potential source of

portfolio investment from abroad.
19
3.2 FOREIGN INVESTMENT
Foreign capital flows have come to be acknowledged as one of the important sources of
funds for economies that would like to grow at a rate higher than what their domestic
savings can support. Foreign capital flows have particularly become prominent after the
advent of globalization that has led to widespread implementation of liberalization
programmers and financial reforms in various countries across the globe in 1990s. This
resulted in the integration of global financial markets. As a result, capital started flowing
freely across national borders seeking out the highest rate of return. The net capital flows
to developing countries which were at US $ 86.6 billion in 1990 have seen a steady
growth over time and are at US $ 284 billion in 2005 representing about 4.2% of the
nominal gross domestic product of developing countries. (Global development finance
2005) Initially these capital flows were mainly in the form of syndicated bank loans. But,
in recent years the debt flows have gradually been replaced with Foreign Direct
Investment (FDI) flows and portfolio flows to a great extent.
3.3 FOREIGN CAPITAL FLOWS IN INDIA
Till the beginning of 1991, India had a highly regulated financial system with a restrictive
foreign exchange regime. The country had a closed capital account and the mobility of
capital was restricted through administrative controls. In 1991 India suffered a balance of
payment crisis and had to devalue the currency. Since it was also faced with the
worldwide declining trend in the availability of official assistance, India embarked on
economic reforms to transform the controlled economy into a market driven one. This
included the financial liberalization strategies like dismantling of capital controls,
reforms in trade and investment policies and so on to integrate the Indian financial
markets with the global financial markets. All these reforms opened the floodgates to
foreign capital flows into the country. The total net capital flows have risen to US $ 10.5
billion in 2004- 05 from US $ 7.1 billion in 1990-91. The cross border flows are
averaging around US $ 10 billion every year currently. Like elsewhere in the globe, the
nature of capital flows has witnessed a transformation over time in India also.
20
The portfolio flows have been one of the major forces that has changed the quantum and
nature of international capital flows to India. Portfolio flows include the investment in
ADRs/GDRs and offshore funds in addition to investment by Foreign Institutional
Investors (FIIs).
Prior to 1992, only non-resident Indians (NRIs) and Overseas corporate bodies (OCBs)
were allowed to undertake portfolio investment in India. Only on September 14, 1992 the
Government of India issued guidelines on FII investments in India which was followed
by a notification by Securities and Exchange Board of India (SEBI) three years later in
November 1995. Ever since the opening up of the market for FIIs, the net investments by
FIIs have always been positive every year except in the year 1998-99 where the net
investment was negative primarily because of the uncertainty that prevailed after India
tested a series of nuclear bombs in May 1998 and the imposition of the economic
sanctions by the United States, Japan and other industrialized countries. On an average
India has received cross border portfolio investment of around US $ 2.2 billion per year
between 1992-93 and 2004-05 of which close to US $ 1.2 billion per year on an average
is the share of FIIs. The cumulative FII investment in India is around US $ 19 billion and
the FII investment in India account for over 10 per cent of the total market capitalization
of the Indian stock market.
3.4 SOURCES OF FII FLOW
The sources of these FII flows are varied. The FIIs registered with SEBI come from as
many as 28 countries (including money management companies operating in India on
behalf of foreign investors).
1. US-based institutions accounted for slightly over 41%

2. UK constitute about 20%
3. Western European countries hosting another 17% of the FIIs
4. The remaining 22% by other countries
21
It is, however, instructive to bear in mind that these national affiliations do not
necessarily mean that the actual investor funds come from these particular countries.
Given the significant financial flows among the industrial countries, national affiliations
are very rough indicators of the ‘home’ of the FII investments. In particular institutions
operating from Luxembourg, Cayman Islands or Channel Islands, or even those based at
Singapore or Hong Kong are likely to be investing funds largely on behalf of residents in
other countries. Nevertheless, the regional breakdown of the FIIs does provide an idea of
the relative importance of different regions of the world in the FII flows.
Factors affecting FII Flows
FII flows and stock returns: FII flows depend on the performance of the stock exchange
of the country. The EPS of the stock exchange of the country is one of the important
factors, which have a bearing on the FII flows in to the country. The FIIs study the
average EPS of various countries’ stock exchange and invest in the profitable ones. The
specific return of specific stocks also influences the FII decisions.
Country risk measures: This includes political and other risks in addition to the usual
economic and financial variables, which may be expected to have an impact on portfolio
flows to India though they are likely to matter more in the case of FDI flows.
3.5 FOREIGN INSTITUTIONAL INVESTOR

22
3.6 FOREIGN INVESTMENTS IN INDIAN CAPITAL MARKETS
India’s decision in 1991 to permit Foreign Institutional Investors (FIIs) to invest in India
was a major step in the globalization of Indian capital market. FIIs have played a major
role in India’s secondary markets and have virtually re written the rules of the market in
recent years. FIIs drive the stock market, especially in technology and media stocks,
using international valuation models and even linking NASDAQ trends with Indian
market capitalization values. The Reserve Bank Of India monitors FII activity in a daily
basis.
Foreign companies/Individuals are permitted to invest in equity shares traded in Indian

Stock markets if they are registered as a Foreign Institutional Investor (FII) or if they
have a sub account in India.
Investment in Indian securities is also possible through the purchase of Global Depository
Receipts (GDR), American Depository Receipts (ADR), Foreign Currency Convertible
Bonds and Foreign Currency Bonds issued by Indian issuers, which are listed, traded and
settled overseas and mainly denominated in US dollars.
Foreign Investors (whether registered as a FII or not) can also invest in Indian securities
outside the FII route. Such investments require case-by-case approval from the Foreign
Investment Promotion Board in the Ministry of Industry and Reserve Bank of India
(RBI), or only by the RBI depending on the size of the investment and the industry in
which this investment is to be made.
FII investments in Indian capital market are more than US $ 11,000 million. Indian Stock
market with a market capitalization of over US $ 165,000 million has been a major
attraction for investors all over the world, because of the new economy boom and
excellent functioning of Stock Exchanges in the Country. The combined daily turnover of
National Stock Exchange (NSE) and The Stock Exchange, Mumbai (BSE) is in excess of
US $ 30,000 million. The screen base trading of NSE and BSE provides transparency in
23
execution of orders, settlement & trade guarantees and elimination of risk of bad
deliveries (in case of dematerialized shares, which constitute over 90% of trade).
3.7 INVESTMENT STRUCTURE OF FII INVESTING

Investme nt St ructure of FII
Typical Structure of FII investing

• Investment in securities
• Earning income from
dealings in securities
FII Investment
• Investment decision taken
outside India and instructs Advisor
GC & Broker
• Evaluates investment
• Coordinates investments
opportunities for FII
made in various jurisdictions Global • Advises FII to buy and
sell particular securities
• Ensures instructions are Custodian
carried out through LC
• Opens and maintains foreign currency and

Rupee A/cs for the FII
Local • Opens and maintains Demat A/c for FII
Custodian • Interacts with Broker in accordance with
instructions received from GC/FII
• Ensures stocks are delivered on sale and
received on purchase
• Buys/sells securities on
behalf of FIIs as per
instructions received from
Broker
FII Page 8
PricewaterhouseCoopers 18 May 2005
3.8 REGULATION RELATING TO FII OPERATION
Regulations Regarding Portfolio Investments by Foreign Institutional Investors

(FIIs)
 Investment by FIIs is regulated under SEBI (FII) Regulations, 1995 and Regulation
5(2) of FEMA Notification No.20 dated May 3, 2000. SEBI acts as the nodal point
in the entire process of FII registration.
24
 FIIs are required to apply to SEBI in a common application form in duplicate. A
copy of the application form is sent by SEBI to RBI along with their 'No Objection'
so as to enable RBI to grant necessary permission under FEMA.
 RBI approval under FEMA enables an FII to buy/sell securities on stock exchanges
and open foreign currency and Indian Rupee accounts with a designated bank
branch.
 FIIs are required to allocate their investment between equity and debt instruments
in the ratio of 70:30. However, it is also possible for an FII to declare itself a 100%
debt FII in which case it can make its entire investment in debt instruments.
 FIIs can invest in listed and unlisted securities including shares, debt instruments
dated Government Securities and Treasury Bills. No individual FII/sub-account can
acquire more than 10% of the paid up capital of an Indian company.
 All FIIs and their sub-accounts taken together cannot acquire more than 24% of the
paid up capital of an Indian Company. Indian Companies can raise the above
mentioned 24% ceiling to the Sectoral Cap / Statutory Ceiling as applicable by
passing a resolution by its Board of Directors followed by passing a Special
Resolution to that effect by its General Body
 Presence of Sectoral Cap/ Statutory ceiling means that foreign investment from all
sources cannot exceed a specified level. A Company to which no sectoral
cap/statutory ceiling is applicable can raise the limit of permissible FII investment
to 100% of the paid up capital.
 A Company to which a 49% cap is applicable can raise the limit of permissible FII
investment to 49% and if there is an existing foreign direct investment of 15%,
possible FII investment can only be up to 34%.
 No permission from RBI is needed so long as the FIIs purchase and sell on
recognized stock exchange.
 All non-stock exchange sales/purchases require RBI permission.
 In order to ensure that the sectoral / statutory ceilings on foreign investment in a
company are not violated due to investment by FIIs, RBI monitors these ceilings for
the companies in respect of which sectoral caps /statutory ceiling have been
indicated by Government of India.
25
 When the total holdings of FIIs reaches within 2% of the applicable limit, Reserve
Bank issues a notice to all concerned that any further purchases of the shares of the
said Company requires prior approval of RBI.
 High Net worth Individuals /foreign corporates can invest through SEBI Registered
FIIs subject to a sub-limit of 5% each within the aggregated limit of 24%.
 Registered Foreign Institutional Investors (FIIs) are allowed to trade in all exchange
traded derivative contracts approved by SEBI from time to time subject to the limits
prescribed by SEBI.
Eligibility Criteria to be fulfilled by the Applicant Seeking FII Registration
As per Regulation 6 of SEBI (Foreign Institutional Investors) Regulations, 1995, Foreign

Institutional Investors are required to fulfill the following conditions to qualify for grant
of registration:
 Applicant should have track record, professional competence, financial

soundness, experience, general reputation of fairness and integrity;
 The applicant should be regulated by an appropriate foreign regulatory authority
in the same capacity/category where registration is sought from SEBI.
Registration with authorities, which are responsible for incorporation, is not
adequate to qualify as Foreign Institutional Investor.
 The applicant is required to have the permission under the provisions of the
Foreign Exchange Management Act, 1999 from the Reserve Bank of India.
 Applicant must be legally permitted to invest in securities outside the country or
its in-corporation / establishment.
 The applicant must be a "fit and proper" person.
 The applicant has to appoint a local custodian and enter into an agreement with
the custodian. Besides it also has to appoint a designated bank to route its
transactions.
 Effect Payment of registration fee of US $ 5,000.00.
26
3.9 INVESTMENTS
Foreign corporate and foreign individuals are eligible to make investments only through
the equity route. The equity investment route permits upto 30% investments in debt
instrument. At least 70% of the investments have to be parked in equity related
instruments, which include:
 Securities in primary and secondary markets (listed or unlisted)

 Units of scheme floated by Unit Trust of India and other domestic mutual funds
(listed or unlisted)
 Warrants and derivative instruments.
FIIs and the Sub-Accounts are permitted to tender their securities directly in response to
open offer made in terms of the SEBI (Substantial Acquisitions of Shares and Takeovers)
Regulations, 1997. FII and the Sub-Accounts are also permitted to offer their shares in
case of buyback of securities and also to lend securities through an approved
intermediary.
• Investments Limits:
 A FII or a Sub-Account can hold upto 10% of paid up equity capital of any
company.
 The total investments made by all the foreign corporates and foreign
individuals shall not exceed 5% of total issued capital of that company within
the aggregate limit for FII portfolio investments.
 The total investments by FII and Sub-Accounts in any Indian Company
cannot exceed 24% of its total paid up capital.
 However, in certain companies, which have passed a Special Resolution in
this regard, the total FII investment can be made upto 49% of the paid up
capital. This limit of 24% / 49% is exclusively available for investments by
FII only.
27
 It may further be noted that this limit of 24% does not include investments
made by FII outside the Portfolio investments route i.e., through the direct
investment approval process. Investments made offshore through purchases of
GDR, ADR and convertibles are also excluded.
3.10 PORTFOILIO INVESTMENT BY FII’s
A country with a developing economy cannot depend exclusively on its own domestic
savings to propel its economy's rapid growth. The domestic savings of India presently are
25% of its GDP. But this can provide only a 2 to 3% growth of its economy on annual
basis. The country has to maintain an 8 to 10% growth for a period of two decades to
reach the level of advanced nations and to wipe out widespread poverty of its people. The
gap is to be covered by inflow of foreign investment along with advanced technology.
3.11 FOREIGN DIRECT INVESTMENTS AND PORTFOLIO INVESTMENT
Foreign Direct Investment
 A company from one country obtains controlling interest in a (new or

existing) firm in another country, and then operates that firm as a part of
the multinational business of the investing firm.
 FDI may be financed through parent company transfer of funds to the new
affiliate, borrowing from home-country lenders, borrowing in the host
country by the parent company, or any combination of these strategies.
 Exists in principle when the foreign firm has de facto control over the
host-country firm. (Control of assets)
28
 Does not require international transfer of fund but of ownership which
may finance the transaction in diverse ways
Portfolio Investment
 A firm buys stocks, bonds, and/or other financial instruments that do not
involve management of the assets.
 Requires international transfer of funds
There are differences, between FDI and the other flows. FDI is problematic for foreign
investors because it means bringing into a country managerial capacity and organization.
In contrast, FII is easy. Only money needs to be invested for earning returns. No effort is
required to build organizational capacity for operating in that market. But if a country
does not have a well-developed stock market, foreign investment has limited choices.
Today, it is relatively effortless for a foreign institutional investor (FII) to enter the
capital market. A Sebi registration, proceeded by a fairly perfunctory due diligence, is all
it takes before an FII can enter the Indian stock market and commence trading. Exit is
equally simple.
For FDI, however, both entry and exit are far more difficult. Even in sectors opened to
FDI on paper, problems remain at the grassroots. There are innumerable clearances that
need to be obtained at the state and district levels. There are also a number of practical
hurdles, such as infrastructure bottlenecks, all of which make entry difficult. Exit is more
complicated.
29
3.12 MUTUAL FUNDS
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned through
these investments and the capital appreciation realized are shared by its unit holders in
proportion to the number of units owned by them. Thus a Mutual Fund is the most
suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost. The flow
chart below describes broadly the working of a mutual fund:
Mutual Fund Operation Flow Chart
30
The money thus collected is then invested by the fund manager in different types of
securities. These could range from shares to debentures to money market instruments,
depending upon the scheme's stated objective. The income earned through these
investments and the capital appreciation realized by the scheme are shared by its unit
holders in proportion to the number of units owned by them. Thus a Mutual Fund is the
most suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost.
• Types of Mutual Funds
By Structure:
Open-ended schemes are open for subscription the whole year. They do not have a fixed
maturity. You can buy and sell your units at the NAV related prices to the
Mutual Funds.
Close-ended schemes can be subscribed to, only during the initial public offer and
thereafter you can buy and sell the units of the scheme on the stock exchange where they
are listed. They have a stipulated Maturity period the duration of which is generally 2 to
15 years. They are usually traded at a discount to the NAV.
By Investments Objective:
Growth/Equity Funds
Equity funds (often described as growth funds) aim to provide capital growth by
investing in the shares of individual companies. Depending on the fund’s objective, this
could range from large blue-chip organizations to small and new businesses. Any
dividends received by the fund can be reinvested by the fund manager to provide further
growth or paid to investors. Both risk and returns are high but they could be a good
investment if you have a long-term perspective and can stay invested for at least five
years.
31
Debt/Income Funds
The aim of debt or income funds is to make regular payments to its investors, although
dividends can be reinvested to buy more units of the fund. To provide with a steady
income, these funds generally invest in fixed income securities such as bonds, corporate
debentures, government securities (gilts) and money market instruments. Hence they are
relatively safer than equity funds. At the same time the expected returns from debt funds
would be lower.
Balanced Funds
As the name suggests, these funds aim for balance, so they are made up of a mixture of
equities and debt instruments. They match the goals of investors who seek to grow their
capital and get regular income, while retaining relatively low risk. The debt or bond
element of the fund provides a level of income and acts as the safety net during dynamic
periods in the market, while equities provide the potential for capital appreciation.
Money Market or Liquid Funds
Are an appealing alternative to bank deposits because they aim to provide stability,
liquidity, capital preservation and slightly higher interest rates than bank accounts. When
you invest in a money market fund, the fund manager invests in ‘cash’ assets such as
treasury bills, certificates of deposit and commercial paper. Returns on these funds
fluctuate much less compared to other funds, but they are not guaranteed. They are
appropriate for corporate and individual investors who wish to park their surplus money
in a fund for a short period.
Gilt Funds
Gilt Funds are debt funds, which invest only in Government Securities and hence have
zero credit risk. However it does involve Interest Rate Risk.
32
Marginal Equity Funds
These are funds, which have predominant investment of at least 75% in debt instruments
& the balance in equities. These funds will get you the security of Debt with the flavour
of equities.
Sectoral Funds
These are specialty mutual funds that invest in stocks that fall into a certain sector of the
economy. Here the portfolio is dispersed or spread across the stocks in a particular sector.
This type of scheme is ideal for the investor who has already made up his mind to confine
his risk and return to one particular sector. Thus, a FMCG fund would invest in
companies that manufacture fast moving consumer goods.
3.13 NATIONAL STOCK EXCHANGE
• The Organization
The National Stock Exchange of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which recommended
promotion of a National Stock Exchange by financial institutions (FIIs) to provide access
to investors from all across the country on an equal footing. Based on the
recommendations, NSE was promoted by leading Financial Institutions at the behest of
the Government of India and was incorporated in November 1992 as a tax-
Paying company unlike other stock exchanges in the country.
On its recognition as a stock exchange under the Securities Contracts (Regulation) Act,
1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The Capital Market (Equities) segment commenced operations in
November 1994 and operations in Derivatives segment commenced in June 2000.
33
S&P CNX Nifty
The S&P prefix belongs to the US-based Standard & Poor's Financial Information
Services. S&P owns the most important index in the world, the S&P 500 index, which is
the foundation of the largest index funds and most liquid index futures markets in the
world.
When S&P came to India to look at market indices, they focused upon the S&P CNX
Nifty as opposed to alternative indices. They now stand behind the S&P CNX Nifty, as is
evidenced by the name "S&P CNX Nifty"
CNX stands for CRISIL NSE Indices. CNX ensures common branding of indices, to
reflect the identities of both the promoters, i.e. NSE and CRISIL. Thus, 'C' stands for
CRISIL, 'N' stands for NSE and X stands for Exchange or Index.
Working Of S&P CNX Nifty
S&P CNX Nifty is based upon solid economic research. A trillion calculations were
expended to evolve the rules inside the S&P CNX Nifty index. The results of this work
are remarkably simple:
(a) The size of the stock is 50.

(b) Stocks considered for the S&P CNX Nifty must be liquid by the `impact cost'
criterion
(c) The largest 50 stocks that meet the criterion go into the index.
Features of NSE Nifty
Diversification: S&P CNX Nifty is a more diversified index, accurately reflecting

overall market conditions. The reward-to-risk ratio of S&P CNX Nifty is higher than
34
other leading indices, making it a more attractive portfolio hence offering similar returns,
but at lesser risk.
Liquidity: Over one year (October 1998 to October 1999), the trading volume on
NSE for Nifty stocks was Rs.3.5 trillion, giving a liquidity ratio of 105%. The
`Liquidity Ratio' is defined as trading volume over one year divided by Market
Capitalization today.
Hedging Effectiveness: The basic risk of Nifty futures will be lower owing to the
superior liquidity of Nifty stocks and of NSE. Nifty has higher correlations with typical
portfolios in India as compared to any other index. These two factors imply that hedging
using Nifty futures will be superior.
Governance: Nifty is managed by a professional team at IISL, a company setup by NSE

and CRISIL with technical assistance from Standard & Poor's. There is a three-tier
governance structure comprising the board of directors of IISL, the Index Policy
Committee, and the Index Maintenance Subcommittee. S&P CNX Nifty has fully
articulated and professionally implemented rules governing index revision, corporate
actions, etc. These rules are carefully thought out, under Indian conditions, to dovetail
with operational problems of index funds and index arbitrageurs. S&P CNX Nifty is
relatively free of manipulation, for three reasons:
(a) The index levels are calculated from a highly liquid exchange with superior
surveillance procedures
(b) S&P CNX Nifty has a large market capitalization so the consequence (upon the
index) of a given move in an individual stock price is smaller and
(c) S&P CNX Nifty calculation intrinsically requires liquidity in proportion to market
capitalization, thus avoiding weak links which a manipulator can attack. Users of the
S&P CNX Nifty benefit from the research that is possible owing to the long time-
series available: both S&P CNX Nifty and S&P CNX Nifty Total Returns Index
series are observed from July 1990 onwards. S&P CNX Nifty is backed by solid
economic research and three most respected institutions: NSE, CRISIL and S&P.
35
3.14 FII and Indian Stock Market
Movements in the Nifty during the last two years have clearly been driven by the
behaviour of foreign institutional investors (FIIs), who were responsible for net equity
purchases of as much as Rs 38,965 Crore and Rs 47,182 Crore respectively in 2004 and
2005. These figures compare with a peak level of net purchases of Rs 156 million as far
back as 1996 and net investments by FIIs of just $753 million in 2002. In sum, the
sudden FII interest in Indian markets in the last two years account for the two bouts of
medium-term buoyancy that the Sensex recently displayed.
The cumulative stock of FII investment, totaling Rs 2.75 lakh Crore at the end of 2004,
amounted to just 11 per cent of the Rs 25 lakh Crore total market capitalization on the
Bombay Stock Exchange. However, FII transactions were significant at the margin.
Purchases by FIIs of $31.17 billion between April and December 2005 amounted to
around 38.4 per cent of the cumulative turnover of $83.13 billion in the market during
that period, whereas sales by FIIs amounted to 29.8 per cent of turnover. Not
surprisingly, there has been a substantial increase in the share of foreign stockholding in
leading Indian companies. According to one estimate, by end-2004, foreigners had
cornered close to 30 per cent of the equity in India's top 50 companies - the Nifty 50. In
contrast, foreigners collectively owned just 18 per cent in these companies at the end of
2001 and 22 per cent in December 2002.
A recent analysis estimated that at the end of June 2005, FIIs controlled on average 21.6
per cent of shares in Sensex companies. Further, if we consider only free-floating shares,
or shares normally available for trading because they are not held by promoters,
government or strategic shareholders, the average FII holding rises to more than 36 per
cent. In a third of Sensex companies, FII holding of free-floating shares exceeded 40 per
cent of the total.
36
Given this presence of FIIs, their role in determining share price movements must be
considerable. Indian stock markets are known to be narrow and shallow in the sense that
there are few companies whose shares are actively traded. Thus, though there are more
than 4,700 companies listed on the stock exchange, the BSE Sensex incorporates just 30
companies, trading in whose shares is seen as indicative of market activity. This
shallowness would also mean that the effects of FII activity would be exaggerated by the
influence their behaviour has on other retail investors, who, in herd-like fashion tend to
follow the FIIs when making their investment decisions.
These features of Indian stock markets induce a high degree of volatility for four reasons.
In as much as an increase in investment by FIIs triggers a sharp price increase, it would in
the first instance encourage further investments so that there is a tendency for any
correction of price increases unwarranted by price earnings ratios to be delayed. And
when the correction begins, it would have to be led by an FII pullout and can take the
form of an extremely sharp decline in prices.
Secondly, as and when FIIs are attracted to the market by expectations of a price increase
that tend to be automatically realized, the inflow of foreign capital can result in an
appreciation of the rupee vis-à-vis the dollar (say). This increases the return earned in
foreign exchange, when rupee assets are sold and the revenue converted into dollars. As a
result, the investments turn even more attractive, triggering an investment spiral that
would imply a sharper fall when any correction begins.
Thirdly, the growing realization by the FIIs of the power they wield in what are shallow
markets, encourages speculative investment aimed at pushing the market up and choosing
an appropriate moment to exit. This implicit manipulation of the market, if resorted to
often enough, would obviously imply a substantial increase in volatility.
Finally, in volatile markets, domestic speculators too attempt to manipulate markets in

periods of unusually high prices. Thus, most recently, the Securities and Exchange Board
of India (SEBI) is supposed to have issued show-cause notices to four as-yet-unnamed
37
entities, relating to their activities on around Black Monday, May 17, 2004, when the
Sensex recorded a steep decline to a low of 4505.
The last two years have been remarkable because, though these features of the stock
market imply volatility; there have been more months when the market has been on the
rise rather than on the decline. This clearly means that FIIs have been bullish on India for
much of that time. The problem is that such bullishness is often driven by events outside
the country, whether it is the performance of other equity markets or developments in
non-equity markets elsewhere in the world. It is to be expected that FIIs would seek out
the best returns as well as hedge their investments by maintaining a diversified
geographical and market portfolio. The difficulty is that when they make their portfolio
adjustments, which may imply small shifts in favour of or against a country like India,
the effects it has on host markets are substantial. Those effects can then trigger a
speculative spiral for the reasons discussed above, resulting in destabilizing tendencies.
Thus the end of the Bull Run in January was seen to be the result of a slowing of FII
investments, partly triggered by expectations of an interest rate rise in the U.S.
These aspects of the market are of significance because financial liberalization has meant
that developments in equity markets can have major repercussions elsewhere in the
system. With banks allowed to play a greater role in equity markets, any slump in those
markets can affect the functioning of parts of the banking system.
Similarly, if any set of developments encourages an unusually high outflow of FII capital
from the market, it can impact adversely on the value of the rupee and set of speculation
in the currency that can, in special circumstances, result in a currency crisis. There are
now too many instances of such effects worldwide for it to be dismissed on the ground
that India's reserves are adequate to manage the situation.
Thus, the volatility being displayed by India's equity markets warrant returning to a set of
questions that have been bypassed in the course of neo-liberal reform in India. The most
important of those questions is whether India needs FII investment at all. With the current
38
account of the balance of payments recording a surplus in recent years, thanks to large
inflows on account of non-resident remittances and earnings from exports of software and
Information Technology-enabled services, we do not need those FII flows to finance
foreign exchange expenditures. Neither does such capital help finance new investment,
focused as it is on secondary market trading of pre-existing equity. And finally, we do not
need to shore up the Sensex, since such indices are inevitably volatile and merely help
create and destroy paper wealth and generate, in the process, inexplicable bouts of
euphoria and anguish in the financial press.
In the circumstances, the best option for the policy maker is to find ways of reducing
substantially net flows of FII investments into India's markets. This would help focus
attention on the creation of real wealth as well as remove barriers to the creation of such
wealth, such as the constant pressure to provide tax concessions that erode the tax base
and the persisting obsession with curtailing fiscal deficits, both of which are driven by
dependence on finance capital.
3.15 MUTUAL FUNDS AND INDIAN STOCK MARKET
The transactions by domestic mutual funds (MFs) in the equity market is an indicator of
domestic investor participation in the stock market, domestic investors have been active
participants in recent times.
In 2004, as in the previous years, the numbers on net MF investments (gross purchases
minus sales) in the equity market suggest that MF investments were down to a trickle,
compared to FII flows. Till date in 2005, FIIs have made net equity investments of Rs
47,180 Crore, while MFs have actually pulled out around Rs 13,278 Crore on a net basis.
MFs Account for Significant Volumes: But this wide gulf between the two numbers is
largely because while FII investments have been more of a one-way flow with a steady
increase in the level of purchases from month to month. While MFs have indulged in
heightened levels of both purchase and sales activity, with one canceling out the other.
This has led to a low level of net investments by MFs. If one compares the total
39
purchases and sales activity of MFs to the purchases and sales by FIIs, it is clear that MFs
(and thus domestic investors) do account for a significant portion of the transaction
volumes on the bourses.
Purchases Gather Steam: Take the monthly trends in purchases by MFs, for instance. In
2003, gross purchases by MFs accounted for no more than 31 per cent of the value of
purchases made by the FIIs. In 2004, this proportion climbed to 38 per cent. In 2005,
though FIIs have sharply scaled up their levels of investments, MFs too appear to have
scaled up their purchases. MF purchases remained at over 30 per cent of the FII
purchases, in value terms, in the first nine months of 2005.
This appears to indicate that domestic investors too have been fairly active participants in
the equity markets. And investments routed through MFs obviously represent only a part
of domestic investor interest in the equity market.
If MFs have accounted for significant volumes of purchases on the bourses, they have
had an even higher share of the sales volumes.
The domestic investors have been offloading part of their equity holdings to the FIIs. In
fact, this could be one reason why a pullout by the FIIs tends to pull the plug on a bull
market. The MFs and domestic investors appear to adopt the sell mode when the market
is on a high. So any pullout by FIIs only adds to the selling pressure, which already exists
due to MF selling activity.
A Healthy Trend: But this trend (of heightened MF selling) is not necessarily an
unhealthy trend for the Indian equity market. For one, it shows that domestic investors
have been making use of the sharp rise in the equity values in the recent times to book
profits on their earlier investments. Given that a major portion of investments in equity
MFs have been made at Sensex levels of over 4000, this is a welcome trend, as it
suggests that such investors are likely to have made a profit on their holdings. Second,
the recent pullouts by MFs also reinforce the view that the MFs themselves are taking a
more cautious stance in this bull market than they did in 2000.
40
Portfolio statements of leading MFs show that they appear to be adhering to a discipline
of periodically taking profits on stocks based on target price benchmarks for each of their
holdings.
What is more, MFs have declared liberal dividend payouts on their equity schemes in the
recent Bull Run, ensuring that their investors are able to periodically cash in on gains
when the market is on the upswing.
Both these trends could help diminish the negative experience that domestic investors
have, time and again, faced with equity investing.
41
CHAPTER 4
ANALYSIS OF IMPACT OF INSTITUTIONAL INVESTORS ON
NIFTY VOLATILITY
Table 4(a): Correlation Analysis for the time period 01/04//2004 to
30/06/2004
FII Inflow Nifty MF Flow

FII Inflow 1.000
Nifty 0.282 1.000
MF Flow -0.298 0.033 1.000
N 63 63 63
Correlation is significant at the 0.01 level
Inference:
1. The correlation between Nifty and FII is significant. That means 1% change in
FII flow leads to 1% volatility.
2. The correlation between nifty and MF flow is 0.033. this means that nifty is
not influenced by mutual funds flows. That means 1% volatility leads to
0.033% volatility in mutual funds.
3. The correlation between nifty and mr are significant. Even though it is
negatively correlated. That mean the value obtained is lies between +1 to -1
42
Table 4(b): Correlation Analysis for the time period 01/07//2004 to
30/09/2004

FII Inflow 1.000
Nifty 0.080 1.000
MF Flow 0.009 -0.192 1.000
N 66 66 66
Inference:
1. The correlation between Nifty and FII is significant.
2. The correlation between Nifty and MF flow are negatively correlated.
Table 4(c): Correlation Analysis for the time period 01/10//2004 to

30/12/2004

FII Inflow 1.000
Nifty 0.139 1.000
MF Flow 0.038 0.006 1.000
N 60 60 60
Inference:
1. The correlation between Nifty and FII is significant. That mean 1% change in Fii
flow leads to 1% volatility.
2. The correlation between Nifty and MF flow are positively correlated. Even
though it value is less
43
Table 4(d): Correlation Analysis for the time period 01/01//2005 to
30/03/2005

FII Inflow 1.000
Nifty 0.483 1.000
MF Flow 0.109 0.186 1.000
N 59 59 59
Inference:
1. The correlation between Nifty and FII is significant. That means 1% change in FII
2. The FII and MF flows are positively correlated.
Table 4(e): Correlation Analysis for the time period 01/04//2005 to

30/06/2005

FII Inflow 1.000
Nifty 0.399 1.000
MF Flow -0.154 -0.334 1.000
N 60 60 60
Inference:
44
Table 4(f): Correlation Analysis for the time period 01/07//2005 to
30/09/2005

FII Inflow 1.000
Nifty -0.371 1.000
MF Flow -0.318 0.409 1.000
N 60 60 60
Inference:
2. The correlation between Nifty and MF are significant. Even though it is
negatively correlated. That mean the value obtained is lies between +1 to -1.
Table 4(g): Correlation Analysis for the time period 01/10//2005 to

30/12/2005
FII Inflow 1.000
Nifty 0.277 1.000
MF Flow -0.270 -0.150 1.000
N 60 60 60
Inference:
2. The correlation between Nifty and MF flow are negatively correlated.
45
Table 4(h): Correlation Analysis for the time period 01/01//2006 to
30/03/2006

FII Inflow 1.000
Nifty 0.034 1.000
MF Flow 0.022 0.480 1.000
N 59 59 59
Inference:
2. The FII and MF flows are positively correlated.
Table 4(i): Correlation Analysis for the time period 01/04//2006 to

30/06/2006

FII Inflow 1.000
Nifty 0.111 1.000
MF Flow 0.286 -0.027 1.000
N 63 63 63
Inference:
Table 4(j): Correlation Analysis for the time period 01/07//2006to
30/09/2006
46
FII Inflow 1.000
Nifty 0.367 1.000
MF Flow -0.345 -0.557 1.000
N 64 64 64
Inference:
2. The FII and MF flows are negatively correlated.
Table 4(k): Correlation Analysis for the time period 01/10//2006 to

30/12/2006

FII Inflow 1.000
Nifty -0.181 1.000
MF Flow -0.183 -0.024 1.000
N 62 62 62
Inference:
47
Table 4(L): Correlation Analysis for the time period 01/01//2007 to
30/03/2007

FII Inflow 1.000
Nifty 0.213 1.000
MF Flow -0.221 -0.287 1.000
N 60 60 60
Inference:
2. The correlation between Nifty and MF are significant. Even though it is
negatively correlated. That mean the value obtained is lies between +1 to -1.
48
Table 4(m): Overall Correlation Analysis

FII Inflow 1.000
Nifty 0.127** 1.000
MF Flow -0.072* 0.116* 1.000
N 736 736 736

** Correlation is significant at the 0.01 level
* Correlation is significant at the 0.05 level
Inference:
1 The correlation between Nifty and FII is significant. This means that the FII inflows
influence to a considerable extent on the Nifty volatility.
2 The correlation between Nifty and MF is significant. This means that Nifty is
influenced by the Mutual Fund Flows.
3 The FII inflow and MF flows are negatively correlated. But the correlation is
significant. The correlation is -0.072
4 The number of observations considered for this correlation analysis is 734. The
observations being the daily closing price of Nifty, daily FII cash inflow and daily
MF flow.
49
Table 4(n): model summary
Time period N FII nifty Nifty MF MF FII
1/4/2004 to 63 0.282 0.033 -0.298
30/6/2004
1/7/2004 to 66 0.080 -0.192 0.009
30/9/2004
1/10/2004 to 60 0.139 0.006 0.038
28/12/2004
1/1/2005 to 59 0.483 0.186 0.109
30/3/2005
1/4/2005 to 60 0.399 -0.334 -0.154
30/6/2005
1/7/2005 to 60 -0.371 0.409 -0.318
30/9/2005
1/10/2005 to 60 0.277 -0.150 -0.270
30/12/2005
1/1/2004 to 59 0.034 0.480 0.022
30/3/2006
1/4/2006 to 63 0.111 -0.027 0.286
30/6/2006
1/7/2006 to 64 0.367 -0.557 -0.345
30/9/2006
1/10/2006 to 62 -0.181 -0.024 -0.183
30/12/2006
1/1/2007 to 60 0.213 -0.287 -0.221
30/3/2007
50
Trend of FII activities in India
Year Purchases Sales Net

(Rs mn) (Rs mn) (Rs mn)
2007 5,258,889 4,997,644 261,241
2006 2860214 2388409 471805
2005 1,856,720 1,467,070 389,650
2004 944,120 639,535 304,585
2003 464,790 428,498 36,292
2002 517,792 386,510 131,284
2001 747,907 684,211 63,697
2000 364,303 298,630 65,672
1999 138,998 153,797 -14,799
1998 189,265 127,192 62,073
1997 157,392 49,356 108,036
1996 66,659 28,122 38,538
1995 92,672 24,761 67,912
1994 26,619 668 25,951
Inference: The investments by FIIs have been registering a steady growth since the
opening of the Indian capital markets in September 1992. That this trend has come to stay
is evident from the fact that the FIIs investment in equity and debt markets amounted to
Rs. 261,241 mm in the year 2007, nearly 55.37% when compared to the Rs.471,805 mm
in the corresponding period of calendar 2006.
51
Graph 4(a): Net FII Investments
5 0 0 ,0 0 0
4 0 0 ,0 0 0
3 0 0 ,0 0 0
2 0 0 ,0 0 0
1 0 0 ,0 0 0
0
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
-1 0 0 ,0 0 0
NE T F II INV E S T M E N TS
52
Net MF Inflow into Stock Exchange
Year Purchases Sales Net Investment

(Rs mn) (Rs mn) (Rs mn)
2007 1,479,821 1,307,068 172,734
2006 347855 317198 30656
2005 795087 662301 132787
2004 1,75,988 1,93,953 -17,966
2003 2,85,502 2,81,478 4,025
2002 1,43,818 1,73,304 -30,181
2001 1,22,196 1,72,459 -50,259
2000 1,78,788 1,86,138 -7347
Inference: The mutual fund is an important institution in Stock market operation. Even
though MFs are active trader in stock exchange, they are not influencing much on the
share prices. In most of the year the MFs indulged in negative net investment despite of
heavy purchases. Most of the mutual funds are concentrating on the debt and government
securities market in order to meet the various objectives of the investors.
Graph 4(b): Net MF Inflow into Stock Exchange
200,000
150,000
100,000
50,000
0
2007
2006
2005
2004
2003
2002
2001
2000
-50,000
-100,000
NET MF INVESTMENT
53
CHAPTER 5
SUMMARY OF FINDINGS, CONCLISION AND

RECOMMENDATION
SUMMARY OF FINDINGS
1 The correlation between the independent and dependent variables, Foreign

Institutional Investors (FII) and Index (Nifty), on the daily basis is significant. It
means that daily Movement in the Index can be explained by the movement of FII
Inflows.
2 It can be observed from correlation analysis that 10.7% of the Nifty Index prices are
influenced by the operation of the FII in the stock market.
3 There is correlation between the Mutual Fund Flow and the Nifty Index. It means
that the index can be explained by the movement of MF inflows. The influence of
mutual fund is 15.9%.
4 The daily price of nifty is positively correlated with the inflows of FII in into the
nifty. Therefore if the net investment is positive, then the nifty is also reacting
positively and vice versa in case of negative inflow.
5. The individual investor has a very important role to play in the stock market, as their
influence on the nifty is 61.5%. The individual investor includes retail investors,
speculators, daily traders etc.
6. As the FII influence only around 11% of the market movement, the speculators and
day traders cannot base their decision only on FII activities.
7. The FII are very active in the Index stocks and Blue chip stocks. They are not
investing much in mid cap sector.
8. The Statistic gives that there is a significant positive autocorrelation between the two
independent variables that are FIIs and Mutual Funds’ Cash Flows. It means that
there is not much impact on each other among the independent variables also.
9. Even though the mutual funds are investing a considerable proportion of their equity
fund in non-index stocks, they are not influencing much on the prices of stock. And
also the market.
54
RECOMMENDATIONS
1 The individual investor has a very important role to play in the market. The
individual investor should not base their decision to buy or sell only on the basis of
the FII investments flowing into the market.
2 Considering the volatility in the stock market, the development of a vibrant local
hedge fund industry is essential.
3 The domestic individual investor should actively participate in the stock market so
that the stock market is not controlled only by the FIIs.
4 The individual or retail investor should understand that he has an important role to
play in the market. Proper investor guidance should be provided.
5 The mutual fund companies have to participate actively in the stock market, both in
index and non-index stocks so that stability in the stock market can be established.
55
CONCLUSION
This study analyses the impact primarily of FII & MF Inflows on the volatility of the Index
(Nifty). On the basis of the results from the analysis given above it can be said that the impact of
FII & MF cash inflows on the index volatility is significant enough to influence. The correlation
between the FII & MF inflow and Nifty is positive. Therefore
The Hypothesis 1: H0 of significant impact of FII on Nifty is accepted.
The Hypothesis 2: H0 of significant impact of Mutual Fund on Nifty is accepted
Further if we consider the volatility impact of both FIIs and MFs, only 26.6% of the volatility in
index can be explained by the two variables combined. It means that these two institutional
investors are major contributors of market volatility.
It can be concluded from the analysis that then FII operate only in the index and Blue Chip stocks
and Mutual Fund operate in the Non index and non blue chip stocks. Mutual Funds especially
concentrate on high return Mid cap Companies to invest.
The return on the Indian stock market is considerably high and it is attracting more and more FII.
FII’s are interested in Indian stock exchanges especially Nifty as it constitutes the best 50
companies of India. So the FII are playing a dominant role in the volatility of the Nifty. The
investment of FII is more in Nifty as compared to other stock exchanges of India.
The Purchase and Sale of securities by FII has a bearing on the Nifty prices. This is very much
evident from the crash of index prices when the FII are very active in selling of securities when
they see some economic instability.
The domestic institutional investors have to play an active role in the stock market so as to bring
the stability in the stock market. The stability of the stock market is important indicator of the
economic development.
56
BIBLIOGRAPHY
1 http://www.myiris.com/shares/market/marketPulse/mfMonShow.php?
datval=Dec-2004
2 http://www.indiainfoline.com/stok/fiin/arch.html
3 http://www.cmlinks.com/walchand/fii.asp
4 http://www.financialcertified.com/Hedge%20Funds%20India%20Thomas
%20AAFM%20Journal%20Submission.htm
5 www.indiainfoline.com
6 www.mutualfundsndia.com
7 “International Business” by Eun & Rusnik
57
Date Net FII Nifty Net MF Date Net FII Nifty Net MF
Closing Flows Closing Flows
Index Index
01/04/2004 3490.4 1819.65 -68.94 19/05/2004 -227.5 1567.85 120.23
02/04/2004 755.4 1841.1 156.98 20/05/2004 -49.9 1543.85 50.03
05/04/2004 318.7 1856.6 -56.93 21/05/2004 -116 1560.2 9.86
06/04/2004 417.4 1851.15 -31.96 24/05/2004 -192.5 1608.85 -43.94
07/04/2004 131.2 1848.7 114.12 25/05/2004 28.4 1606.7 -11.21
08/04/2004 168.3 1853.55 -49.94 26/05/2004 -129.8 1598.8 -36.48
12/04/2004 0 1838.2 -50.36 27/05/2004 13.1 1586.4 -48.13
13/04/2004 3.5 1878.45 126.26 28/05/2004 -70.8 1508.75 -75.59
15/04/2004 381 1861.95 117.49 31/05/2004 189.1 1483.6 -58.62
16/04/2004 -185.9 1868.95 50.07 01/06/2004 21.3 1507.9 -34
17/04/2004 0 1868.1 -18.68 02/06/2004 264.9 1535.2 -41.81
19/04/2004 62.6 1844.05 -90.89 03/06/2004 52.8 1495.1 -20.82
20/04/2004 693.2 1844.25 3.95 04/06/2004 51.7 1521.1 -56.12
21/04/2004 11.6 1873.35 22 07/06/2004 -41.4 1542.55 17.81
22/04/2004 89.5 1889.55 29.38 08/06/2004 222.3 1550.55 4.09
23/04/2004 955.2 1892.45 -35.98 09/06/2004 42.7 1548.3 -1.34
27/04/2004 381.1 1817.25 -0.1 10/06/2004 2.5 1544.75 3.72
28/04/2004 7.2 1816.55 -79.56 11/06/2004 -61.1 1508.45 -22.68
29/04/2004 50.9 1808.95 12.28 14/06/2004 -126 1481.35 -87.23
30/04/2004 -332.3 1796.1 59.71 15/06/2004 127.3 1501 -36.2
03/05/2004 25.2 1766.7 32.01 16/06/2004 109.2 1494.75 -12.54
04/05/2004 66.5 1793.1 -61.88 17/06/2004 6.4 1512.05 23.67
05/05/2004 -95.5 1809.9 -35.44 18/06/2004 -11.3 1491.2 39.79
06/05/2004 -38.1 1832.8 7.23 21/06/2004 -15.8 1482 -70.61
07/05/2004 -14.9 1804.45 85.21 22/06/2004 20.8 1474.7 -28.84
10/05/2004 -168.1 1769.1 137.21 23/06/2004 -134 1446.1 -61.54
11/05/2004 -595.2 1699.45 102.41 24/06/2004 -108.1 1470.75 -94.1
12/05/2004 -403.4 1711.1 225.22 25/06/2004 26.8 1488.5 65.29
13/05/2004 -295.1 1717.5 130.6 28/06/2004 44.9 1514.35 29.08
14/05/2004 -604.4 1582.4 399.99 29/06/2004 9.7 1518.3 69.93
17/05/2004 -504.4 1388.75 341.51 30/06/2004 10.8 1505.6 54.66
18/05/2004 -63.6 1503.95 -23.85
58
Date Net Nifty Net MF Date Net FII Nifty Net MF
FII Closing Flows Closing Flows
Index Index
1/7/2004 -184.8 1537.2 -34.06 17/08/2004 -95.5 1604.35 34.5
2/7/2004 145 1537.5 -6.52 18/08/2004 -50.4 1581.8 4.97
5/7/2004 61.1 1526.85 -37.16 19/08/2004 -72.6 1609.2 20.64
6/7/2004 47.8 1558.25 -11.49 20/08/2004 1824.9 1590.35 1.25
7/7/2004 35.2 1566.8 -8.59 23/08/2004 377.1 1578.2 19.62
8/7/2004 -11.7 1518.15 81.69 24/08/2004 -23.5 1591.6 48.98
9/7/2004 147.6 1553.2 40.85 25/08/2004 -54.3 1595.7 -90.32
12/7/2004 -73.7 1556.95 -53.7 26/08/2004 -105.1 1610.75 25.19
13/07/2004 111.8 1539.3 -43.06 27/08/2004 126 1609 38.86
14/07/2004 -13.1 1522.75 -15.5 30/08/2004 -75.9 1628.45 12.67
15/07/2004 -48.9 1539.4 28.19 31/08/2004 31.1 1631.75 49.36
16/07/2004 -127.9 1558.8 57.58 1/9/2004 16.9 1635.45 65.67
19/07/2004 132.5 1571.6 -17.64 2/9/2004 20.2 1629.3 30.97
20/07/2004 99.6 1566.1 13.9 3/9/2004 155.6 1634.1 68.23
21/07/2004 61.1 1581.4 -83.48 6/9/2004 69.3 1644 18.9
22/07/2004 18.6 1598.1 105.91 7/9/2004 -39.7 1650.15 -31.98
23/07/2004 64.7 1601.6 9.82 8/9/2004 38.4 1656.25 77.81
26/07/2004 69 1618 -29.21 9/9/2004 45.5 1649 -69.29
27/07/2004 127.3 1600.75 101.65 10/9/2004 155.8 1668.75 22.49
28/07/2004 60.9 1594.15 -98.56 13/09/2004 140.1 1675.2 -0.11
29/07/2004 29.1 1618.7 -94.27 14/09/2004 110.5 1685.55 5.43
30/07/2004 162.2 1632.3 38.19 15/09/2004 183.6 1683.2 -98.04
2/8/2004 98.4 1639.05 -16.74 16/09/2004 104.5 1705.7 12.18
3/8/2004 58.6 1630.6 38.57 17/09/2004 148.5 1733.65 -43.22
4/8/2004 30.6 1626.55 -62.08 20/09/2004 481.1 1728.8 -70.95
5/8/2004 5.5 1654.95 -67.41 21/09/2004 220.1 1750.2 31.61
6/8/2004 171.9 1633.4 -70.32 22/09/2004 204.5 1753.9 -46.16
9/8/2004 -27.7 1642.6 -42.12 23/09/2004 117.6 1726.15 -23.56
10/8/2004 32.3 1652.15 8.22 24/09/2004 -146.5 1722.5 10.25
11/8/2004 58.3 1621.6 -33.18 27/09/2004 83.6 1717.5 -6.49
12/8/2004 -74.4 1607.2 -24.31 28/09/2004 38.9 1700.25 -74.26
13/8/2004 -148.3 1598.2 -28 29/09/2004 130.1 1727.95 -46.86
16/8/2004 805.3 1599.15 33.82 30/09/2004 107 1745.5 -58.24
59
Index Index
1/10/2004 416 1775.15 41.59 16/11/2004 -112.6 1879 -41.57
4/10/2004 242.8 1805.65 33.25 17/11/2004 357.5 1888.65 -41.29
5/10/2004 413.2 1812.45 105.98 18/11/2004 270 1892.05 -45.44
6/10/2004 176.6 1794.9 -36.58 19/11/2004 216 1872.35 112.08
7/10/2004 21.8 1815.7 167.94 22/11/2004 517.3 1873.35 200.52
8/10/2004 259.6 1820.2 -58.19 23/11/2004 336.4 1892.6 -0.65
9/10/2004 117.2 1817.8 2.68 24/11/2004 562.9 1904.05 -36.6
11/10/2004 3.7 1807.75 -75.98 25/11/2004 279.1 1901.05 13.01
12/10/2004 166 1786.9 137.75 29/11/2004 529.6 1939.65 -29.46
14/10/2004 66.4 1794.75 -88.84 30/11/2004 498.2 1958.8 111.67
15/10/2004 174.5 1795 10.93 1/12/2004 876.9 1962.05 148.03
18/10/2004 39.5 1786 -28.36 2/12/2004 332.1 1999 102.45
19/10/2004 111.2 1808.4 -52.07 3/12/2004 994.2 1996.2 -83.48
20/10/2004 83.1 1790.05 -42.65 6/12/2004 473.4 1993.15 131.21
21/10/2004 -13.1 1779.75 6.24 7/12/2004 299.7 1992.7 -81.77
25/10/2004 -171 1757.25 16.23 8/12/2004 305.2 1977.95 -19.81
26/10/2004 77.9 1781.05 48.53 9/12/2004 147.4 1989.95 -94.66
27/10/2004 90.1 1783.85 83.14 10/12/2004 151.9 1969 -94.5
28/10/2004 71.6 1800.1 117.52 13/12/2004 328.9 1985.35 -59.45
29/10/2004 916.2 1786.9 12.35 14/12/2004 199.7 2006.8 30.11
1/11/2004 1195.1 1797.75 28.38 15/12/2004 182.4 2028.7 163.52
2/11/2004 131.9 1813.7 71.86 16/12/2004 406.6 2033.2 -14.46
3/11/2004 21.3 1837.4 146.35 17/12/2004 346.3 2012.1 -6.8
4/11/2004 70.9 1834.85 -74.26 20/12/2004 161.4 2026.85 23.07
5/11/2004 330.7 1852.3 -32.05 21/12/2004 -49.4 2044.65 29.96
8/11/2004 585.1 1862.8 -92.05 22/12/2004 179.9 2035.35 75.09
9/11/2004 295 1858.75 -23.79 23/12/2004 343.8 2045.15 -22.61
10/11/2004 272 1876.1 -17.95 24/12/2004 235.9 2062.7 31.09
11/11/2004 167.4 1870.55 -95.82 27/12/2004 187.7 2062.6 36.72
12/11/2004 217 1872.95 0.23 28/12/2004 29.6 2071.35 31.72
60
Index Index
3/1/2005 106.7 2115 -49.23 16/02/2005 604.1 2068.8 -97.32
4/1/2005 345.9 2103.75 0 17/02/2005 473 2061.9 22.24
5/1/2005 200.63 2032.2 -0.99 18/02/2005 233.3 2055.55 -131.98
6/1/2005 -57.9 1998.35 -24.62 21/02/2005 252 2043.2 45.18
7/1/2005 -31.8 2015.5 62.32 22/02/2005 210.8 2058.4 0
10/1/2005 -68.3 1982 92.76 23/02/2005 257 2057.1 61.64
11/1/2005 -32 1952.05 0 24/02/2005 297.8 2055.3 49.73
12/1/2005 -86.5 1913.6 -16.28 25/02/2005 41.5 2060.9 52.34
13/01/2005 -185.8 1954.55 -29.78 28/02/2005 464.1 2103.25 29.65
14/01/2005 -0.8 1931.1 28.56 1/3/2005 342.8 2084.4 69.56
17/01/2005 116 1932.9 -67.4 2/3/2005 538.2 2093.25 94.97
18/01/2005 15.8 1934.05 0 3/3/2005 698.5 2128.85 183.32
19/01/2005 -164.6 1926.65 -9.26 4/3/2005 367.6 2148.15 -70.78
20/01/2005 -77.3 1925.3 5.87 7/3/2005 554.3 2160.1 225.21
24/01/2005 -13.3 1909 131.05 8/3/2005 461.8 2168.95 153.27
25/01/2005 -158.6 1931.85 51.76 9/3/2005 498.3 2160.8 91.29
27/01/2005 -281.8 1955 71.95 10/3/2005 793.2 2167.4 142.34
28/01/2005 198.8 2008.3 0 11/3/2005 1310 2154 0
31/01/2005 632 2057.6 60.34 14/03/2005 130.7 2146.35 47.76
3/2/2005 1374 2059.85 44.38 15/03/2005 2897.5 2128.95 51.13
7/2/2005 249.6 2052.25 73.16 16/03/2005 -46.1 2125.55 160.63
1/2/2005 895.3 2079.45 -22.77 17/03/2005 -198.8 2098.5 39.9
2/2/2005 -42.3 2077.95 0 18/03/2005 64.2 2109.15 -72.1
4/2/2005 489.3 2055.1 104.98 21/03/2005 136 2096.6 0
8/2/2005 105.3 2055.15 239.69 22/03/2005 43.8 2061.6 49.9
9/2/2005 220.1 2070 82.34 23/03/2005 -42.5 2026.4 -38.56
10/2/2005 128.4 2063.35 -71.95 24/03/2005 -131.2 2015.4 24.88
11/2/2005 176.6 2082.05 -58.42 28/03/2005 263.2 2029.45 -21.11
14/02/2005 249.5 2098.25 0 29/03/2005 535.3 1983.85 142.44
15/02/2005 834.2 2089.95 -49.35
61
Index Index
1/4/2005 358.6 2067.65 41.52 30/05/2005 -446.9 2012.6 123.63
4/4/2005 27.9 2063.4 49.96 31/05/2005 185.3 1990.8 446.29
5/4/2005 244 2052.55 131.97 2/5/2005 -34.3 1982.75 180.94
6/4/2005 103.4 2069.3 79.82 1/5/2005 200.63 1990.85 374.53
7/4/2005 95.1 2052.85 54.38 3/5/2005 -16 1992.4 0
8/4/2005 59.9 2031.2 0 4/5/2005 30.2 2013.9 286.35
11/4/2005 -54.3 2008.2 176.21 5/5/2005 -67.6 2028.6 162.65
12/4/2005 70.5 2024.95 162.8 6/5/2005 123.3 2043.85 99.18
13/04/2005 -108.7 2025.45 -17.33 9/5/2005 127.3 2074.7 187.01
15/04/2005 176.4 1956.3 138.56 10/5/2005 39 2076.4 213.89
18/04/2005 -574.4 1927.8 225.12 1/6/2005 298.5 2087.55 -57.55
19/04/2005 -456.7 1909.4 0 2/6/2005 205.2 2064.65 -73.88
20/04/2005 -124.1 1929.7 27.05 3/6/2005 125.5 2094.25 -211.94
21/04/2005 -231.2 1948.55 49.92 4/6/2005 302.5 2092.35 -88.37
22/04/2005 -22.8 1967.35 57.29 6/6/2005 32.7 2092.8 0
25/04/2005 284 1970.95 -2.47 7/6/2005 87.7 2098.15 -32.86
26/04/2005 12.9 1957.1 65.42 8/6/2005 76.4 2112.4 -317.29
27/04/2005 -55.5 1935.4 69.45 9/6/2005 292.8 2103.2 -305.05
28/04/2005 -133.9 1941.3 -7.97 10/6/2005 1714.8 2090.6 -68.17
29/04/2005 -325.2 1902.5 41.93 13/06/2005 261.9 2102.75 -228.13
16/05/2005 190.7 1916.75 -75.37 14/06/2005 -2131.3 2112.35 0
17/05/2005 -183.3 1920.7 -136.32 15/06/2005 185.3 2128.65 -166.75
18/05/2005 -74 1942.6 0 16/06/2005 392.8 2123.7 -86.28
19/05/2005 -438.5 1963.3 68.77 17/06/2005 418.3 2123.4 -13.91
20/05/2005 63.5 1977.5 123.81 20/06/2005 229.5 2144.35 21.54
23/05/2005 -22.9 2000.75 293.17 21/06/2005 460.8 2170 4.67
24/05/2005 64 1994.3 347.84 22/06/2005 298.9 2187.35 0
25/05/2005 -162.5 1985.95 70.24 23/06/2005 1467.6 2183.85 -30.06
26/05/2005 -10.9 1993.15 0 24/06/2005 485.3 2194.35 -9.56
27/05/2005 -185.1 1988.3 77.71 27/06/2005 354.2 2199.8 46.38
62
Index Index
1/7/2005 732.1 2169.85 108.26 17/08/2005 17.6 2360.15 110.08
4/7/2005 314.5 2191.65 182.62 18/08/2005 156.3 2380.9 77.53
5/7/2005 196 2220.6 143.78 19/08/2005 47.1 2361.55 132.04
6/7/2005 380.3 2211.9 0 22/08/2005 -77.1 2369.8 0
7/7/2005 387.8 2230.65 148.21 23/08/2005 9.4 2403.15 505.61
8/7/2005 405.9 2210.75 36.61 24/08/2005 60.6 2388.45 235.55
11/7/2005 322.3 2228.2 72.29 25/08/2005 -110.5 2383.45 189.43
12/7/2005 462.6 2179.4 23.04 26/08/2005 306.8 2367.85 -93.29
13/07/2005 376.9 2196.2 10.11 29/08/2005 117 2326.1 -86.91
14/07/2005 253 2218.85 0 30/08/2005 9.2 2322.5 0
15/07/2005 176.6 2220.8 106.63 1/9/2005 371.4 2354.55 27
18/07/2005 204.6 2204.05 40.48 2/9/2005 313.1 2357.05 454.37
19/07/2005 369.4 2185.1 -138.76 5/9/2005 234 2337.65 200.21
20/07/2005 388.1 2212.55 -125.89 6/9/2005 247.9 2367.75 232.43
21/07/2005 317.7 2234 -111.12 8/9/2005 70.7 2384.65 133.34
22/07/2005 299.1 2237.3 0 9/9/2005 543.3 2405.75 0
25/07/2005 1040.6 2241.9 -92.84 12/9/2005 -50 2415.8 90.54
26/07/2005 621.5 2230.5 -103.3 13/09/2005 167.6 2422.95 1.54
27/07/2005 490.9 2265.6 -37.61 14/09/2005 418.2 2428.65 90.92
29/07/2005 194.2 2291.75 -62.86 15/09/2005 158.7 2454.45 74.9
2/8/2005 642.7 2303.15 156.72 16/09/2005 407.2 2455.45 121.51
3/8/2005 563.8 2319.1 197.16 19/09/2005 443.7 2484.15 0
4/8/2005 279.8 2312.3 47.11 20/09/2005 101.1 2500.35 164.46
5/8/2005 241 2318.05 0 21/09/2005 321.9 2492.45 39.59
8/8/2005 807.2 2353.65 52.17 22/09/2005 307.6 2523.95 132.21
9/8/2005 419.9 2357 157.02 23/09/2005 514.4 2552.35 270.38
10/8/2005 118.7 2367.8 170.78 26/09/2005 -325.5 2567.1 316.07
11/8/2005 -101.3 2361.2 95.92 27/09/2005 199.3 2578 0
12/8/2005 -0.2 2324.4 70.73 28/09/2005 26.3 2567.3 284.71
16/08/2005 274.9 2318.7 -32.96 29/09/2005 42.5 2476.5 183.31
63
Index Index
3/10/2005 -36.9 2477.75 202.57 18/11/2005 90.8 2492.65 114.3
4/10/2005 -118.4 2557.35 223.82 21/11/2005 286.3 2489.1 107.48
5/10/2005 421.6 2574.85 92.03 22/11/2005 423.7 2500.7 107.48
6/10/2005 54.1 2598.05 285.54 23/11/2005 167.6 2548.65 69.62
7/10/2005 -568.5 2611.2 189.81 24/11/2005 311.9 2558.7 207.11
10/10/2005 -291.9 2601.4 276.74 25/11/2005 461.4 2582.75 -83.33
11/10/2005 74 2630.05 25.71 26/11/2005 247.9 2603.95 -38.06
13/10/2005 -135.5 2663.35 596.91 28/11/2005 39.4 2620.05 -28.04
14/10/2005 -399.6 2644.4 312.72 29/11/2005 158.7 2602.5 -61.61
17/10/2005 293.1 2579.15 237.41 30/11/2005 253.9 2572.85 0
18/10/2005 -299.1 2574.05 -80.72 1/12/2005 261.5 2608.6 241.94
19/10/2005 -223.8 2566.85 23.22 2/12/2005 425.1 2635 183.54
20/10/2005 -196.7 2589.55 177.66 5/12/2005 514.7 2664.3 29.9
21/10/2005 -71.1 2537.3 -66.9 6/12/2005 -46.8 2683.45 126.92
24/10/2005 -404.4 2484.4 94.52 7/12/2005 72.8 2712 -19.73
25/10/2005 -132.1 2485.15 72.77 8/12/2005 -68.5 2698.3 7.69
26/10/2005 -232.7 2468.2 -149.45 9/12/2005 -41 2652.25 -95.9
27/10/2005 -453.6 2412.45 -41.98 12/12/2005 420.1 2698.95 -80.34
28/10/2005 -755.1 2395.45 156.32 13/12/2005 281.2 2697.95 -155.89
31/10/2005 -217.7 2443.75 0 14/12/2005 1163.9 2660.5 -5.29
1/11/2005 -148.6 2394.85 27.81 15/12/2005 432.6 2662.3 -420.1
2/11/2005 50.6 2418.2 -33.14 16/12/2005 542.1 2693 -145.32
3/11/2005 384.5 2408.5 176.58 19/12/2005 2685.5 2706.7 -134.27
8/11/2005 530.8 2352.9 17.9 20/12/2005 1125.1 2756.45 0
9/11/2005 609.2 2316.05 64.41 21/12/2005 322 2776.2 48.78
10/11/2005 99.1 2370.95 103.69 22/12/2005 384.7 2812.3 -71.04
11/11/2005 -137 2344.56 0.43 23/12/2005 260.6 2804.55 124.68
14/11/2005 29.2 2386.75 35.42 26/12/2005 241.6 2778.55 -16.7
16/11/2005 34 2419.05 -96.67 27/12/2005 56 2810.15 -183.13
17/11/2005 145.3 2461.6 117.19 28/12/2005 21.6 2842.6 -52.17
Index Index
64
17/01/2006 -32.4 2826.2 6.71 20/02/2006 344.4 3017.55 59.62
31/01/2006 347.8 2822.9 94.13 21/02/2006 586.1 3022.2 124.75
23/01/2006 55 2835.95 326.91 22/02/2006 125.3 3021.6 -66.78
24/01/2006 -318.2 2883.35 -230.83 27/02/2006 1001.8 2981.5 -106.43
2/1/2006 526.9 2904.4 -57.31 16/02/2006 -57.7 3005.85 0.18
4/1/2006 466.6 2899.85 -52.01 1/2/2006 217.4 3035.5 139.62
9/1/2006 344.5 2914 4.28 3/2/2006 364.1 3050.8 -330.01
12/1/2006 -2.2 2910.1 47.67 28/02/2006 383.8 3062.1 44.66
25/01/2006 42.1 2870.8 -262.53 10/2/2006 -118.3 3050.05 -51.32
3/1/2006 477.7 2850.7 -301.78 2/3/2006 576 3067.45 441.47
10/1/2006 397 2850.55 -216.37 7/3/2006 247.1 3074.7 256.69
20/01/2006 81.4 2833.1 -28.92 13/03/2006 624.8 3123.1 52.3
27/01/2006 820 2829.1 315.83 23/03/2006 300.6 3150.7 317.8
5/1/2006 912 2809.2 -171.28 6/3/2006 389.8 3147.35 513.82
6/1/2006 86.9 2870.85 -310.19 10/3/2006 -287 3190.4 -53.01
13/01/2006 -1028.9 2900.95 -13.61 16/03/2006 164.6 3182.8 56.03
16/01/2006 7.6 2884.05 58.19 17/03/2006 24.2 3116.7 64.18
19/01/2006 2.3 2908 -106.29 27/03/2006 137.5 3129.1 209.28
30/01/2006 719.1 2940.35 -73.18 1/3/2006 201.8 3183.9 101.89
18/01/2006 320.3 2982.75 -222.63 30/03/2006 93.9 3202.65 460.5
14/02/2006 335.5 2974.5 217.33 3/3/2006 645.7 3195.35 138
15/02/2006 -501.6 3001.1 59.65 8/3/2006 222.5 3226.6 40.44
23/02/2006 417.4 2971.55 -149.51 9/3/2006 832.3 3234.05 289.91
7/2/2006 796.5 2967.45 -70.03 14/03/2006 229.5 3265.65 413.24
13/02/2006 614.4 2940.6 22.83 20/03/2006 474.9 3262.3 217.77
17/02/2006 247.1 3000.45 -18.76 21/03/2006 148.2 3240.15 483.57
8/2/2006 935.6 3020.1 -157.57 22/03/2006 181.7 3247.15 -64.42
24/02/2006 761.4 3008.95 0 24/03/2006 56.3 3279.8 229.48
2/2/2006 508.1 3027.55 69.87 28/03/2006 550.2 3321.65 0
6/2/2006 626.5 3041.15 46.9
65
Index Index
3-Apr-06 452 3473.3 3,087.00 22-May-06 -13,613.00 3081.35 892
4-Apr-06 4,779.00 3483.15 4,685.40 23-May-06 -9,298.00 3199.35 191
5-Apr-06 1,324.00 3510.9 2,239.70 24-May-06 -12,432.00 3115.55 1,164.70

7-Apr-06 3,140.00 3454.8 1,916.00 25-May-06 -19,350.00 3177.7 -2,688.70
10-Apr-06 -4,271.00 3478.45 638.4 26-May-06 -16,328.00 3209.6 -2,688.70
12-Apr-06 -4,271.00 3380 -18.8 29-May-06 -2,527.00 3214.9 74.4
13-Apr-06 -4,217.00 3345.5 -167.7 30-May-06 -818 3185.3 -261.1
17-Apr-06 -7,348.00 3425.15 -23.6 31-May-06 -84 3071.05 -2,127.30
18-Apr-06 -9,605.00 3518.1 -23.6 1-Jun-06 -8,323.00 2962.25 -2,413.70
19-Apr-06 2,529.00 3535.85 -23.7 2-Jun-06 -2,822.00 3091.35 -3,394.90
20-Apr-06 -2,739.00 3573.5 1,124.70 5-Jun-06 6,404.00 3016.65 -2,762.40
21-Apr-06 -2,011.00 3573.05 -795 6-Jun-06 5,710.00 2937.3 2,062.70
24-Apr-06 2,249.00 3548.9 0 7-Jun-06 848 2860.45 2,062.70
25-Apr-06 1,515.00 3462.65 1,928.60 8-Jun-06 319 2724.35 -788.1
26-Apr-06 1,948.00 3555.75 -1,198.20 9-Jun-06 1,112.00 2866.3 858.1
27-Apr-06 -5,088.00 3508.1 -1,198.20 12-Jun-06 5,089.00 2776.85 2,065.30
28-Apr-06 -2,062.00 3508.35 1,287.10 13-Jun-06 979 2663.3 -395
29-Apr-06 25,138.00 3557.6 1,287.00 14-Jun-06 -818 2632.8 520.6
2-May-06 609 3605.45 621.9 15-Jun-06 -3,634.00 2798.8 1,298.70
3-May-06 2,185.00 3634.25 -575.8 16-Jun-06 1,399.00 2890.35 -1,551.50
4-May-06 9,072.00 3648.4 737 19-Jun-06 6,595.00 2916.9 -149.8
5-May-06 3,226.00 3663.95 1,474.30 20-Jun-06 219 2861.3 1,643.00
8-May-06 11,081.00 3693.15 2,896.30 21-Jun-06 -1,996.00 2923.45 1,643.00
9-May-06 3,665.00 3720.55 -1,050.80 22-Jun-06 916 2994.75 776.5
10-May-06 4,605.00 3754.25 -13.1 23-Jun-06 -2,026.00 3042.7 1,460.20
11-May-06 3,229.00 3701.05 -710.2 24-Jun-06 -675 3050.3 1,460.60
12-May-06 -11,991.00 3650.05 655.8 26-Jun-06 70 2943.2 3,111.30
15-May-06 186 3502.95 1,001.60 27-Jun-06 -268 2982.45 3,447.20
16-May-06 -7,284.00 3523.3 1,002.90 28-Jun-06 -1,111.00 2981.1 3,447.10
17-May-06 -5,334.00 3635.1 -1,085.50 29-Jun-06 -390 2997.9 2,674.60
18-May-06 -4,235.00 3388.9 1,167.90 30-Jun-06 -2,802.00 3128.2 1,450.50
19-May-06 -8,106.00 3246.9 1,167.90
66
Index Index
3-Jul-06 1,063.00 3150.95 11,619.90 17-Aug-06 9,520.00 3353.9 0
4-Jul-06 2,548.00 3138.65 11,556.10 18-Aug-06 8,088.00 3356.75 -3,842.60
5-Jul-06 2,147.00 3197.1 5,337.00 21-Aug-06 5,191.00 3366 -397.6
6-Jul-06 5,560.00 3156.4 5,337.00 22-Aug-06 427 3364.6 -397.6
7-Jul-06 91 3075.85 4,027.40 23-Aug-06 -97 3335.8 -166.2
10-Jul-06 -4,359.00 3142 4,027.40 24-Aug-06 -521 3370.4 1,918.70
11-Jul-06 -474 3116.15 8,483.40 25-Aug-06 676 3385.95 1,661.40
12-Jul-06 -1,335.00 3195.9 7,626.90 28-Aug-06 678 3401.1 -1,253.20
13-Jul-06 3,753.00 3169.3 1,933.00 29-Aug-06 434 3425.7 -291.2
14-Jul-06 141 3123.35 3,432.10 30-Aug-06 3,689.00 3430.35 4,337.70
17-Jul-06 -3,436.00 3007.55 7,942.50 31-Aug-06 3,369.00 3413.9 428.8
18-Jul-06 -5,675.00 2993.65 7,853.60 1-Sep-06 4,871.00 3435.45 -387.5
19-Jul-06 -3,071.00 2932.75 7,853.50 4-Sep-06 2,366.00 3476.85 -408
20-Jul-06 899 3023.05 3,561.70 5-Sep-06 4,511.00 3473.75 -1,275.40
21-Jul-06 3,213.00 2945 -679.2 6-Sep-06 -696 3477.25 -108.5
24-Jul-06 -535 2985.85 -679.3 7-Sep-06 4,512.00 3454.55 979.3
25-Jul-06 315 3040.5 5,282.30 8-Sep-06 -163 3471.45 -619.6
26-Jul-06 2,298.00 3110.15 5,282.30 11-Sep-06 -489 3366.15 -796.3
27-Jul-06 2,380.00 3156.15 1,515.10 12-Sep-06 947 3389.9 118.2
28-Jul-06 4,617.00 3130.8 2,344.10 13-Sep-06 -1,206.00 3454.55 71.5
31-Jul-06 1,312.00 3143.2 1,059.20 14-Sep-06 5,194.00 3471.6 -2,924.30
1-Aug-06 3,558.00 3147.8 2,749.10 15-Sep-06 4,915.00 3478.6 -102
2-Aug-06 -463 3182.1 1,423.80 18-Sep-06 4,590.00 3492.75 -124
3-Aug-06 1,041.00 3190 1,423.80 19-Sep-06 4,951.00 3457.35 -2,314.80
4-Aug-06 2,401.00 3176.75 -600.1 20-Sep-06 2,766.00 3502.8 -2,314.80
7-Aug-06 -470 3151.1 -2,067.90 21-Sep-06 2,360.00 3553.05 -2,175.70
8-Aug-06 1,159.00 3212.4 -2,952.60 22-Sep-06 2,888.00 3544.05 -4,174.20
9-Aug-06 2,986.00 3254.6 869 25-Sep-06 1,521.00 3523.45 -1,094.30
10-Aug-06 2,505.00 3260.1 1,401.30 26-Sep-06 -2,685.00 3571.75 1,255.90
11-Aug-06 1,519.00 3274.35 -2,063.50 27-Sep-06 349 3579.3 -408.4
14-Aug-06 635 3313.1 -2,063.50 28-Sep-06 5,550.00 3571.75 -795.5
16-Aug-06 106 3356.05 382.2 29-Sep-06 7,195.00 3588.4 2,628.00
67
Index Index
3-Oct-06 12,935.00 3569.6 2,760.90 15-Nov-06 15,238.00 3876.3 -1,236.60
4-Oct-06 -2,943.00 3515.35 2,352.10 16-Nov-06 996 3876.85 -3,645.80
5-Oct-06 -4,194.00 3564.9 886.2 20-Nov-06 13,027.00 3852.8 -3,646.30
6-Oct-06 1,237.00 3569.7 42.9 21-Nov-06 580 3856.15 -1,483.00
9-Oct-06 710 3567.15 -801.4 22-Nov-06 6,423.00 3918.25 -1,483.00
10-Oct-06 -457 3571.05 1,419.70 23-Nov-06 -211 3954.75 154.8
11-Oct-06 964 3558.55 -382.6 24-Nov-06 11,787.00 3945.45 1,980.40
12-Oct-06 8,034.00 3621.05 -241.5 27-Nov-06 9,946.00 3950.85 1,938.30
13-Oct-06 5,393.00 3676.05 -159.2 28-Nov-06 4,056.00 3968.9 3,485.80
16-Oct-06 10,938.00 3723.95 1,322.80 29-Nov-06 -3,353.00 3921.75 372.1
17-Oct-06 7,947.00 3715 1,322.80 30-Nov-06 -630 3928.2 178.1
18-Oct-06 3,890.00 3710.65 -162 1-Dec-06 2,581.00 3954.5 29.5
19-Oct-06 10,079.00 3677.8 -162 4-Dec-06 3,493.00 3997.6 1,307.70
20-Oct-06 -371 3676.85 622.8 5-Dec-06 -28,138.00 4001 248.7
21-Oct-06 4,441.00 3683.5 -4,163.30 6-Dec-06 4,332.00 4015.75 -3,893.80
23-Oct-06 -232 3657.3 -2,133.80 7-Dec-06 2,442.00 4015.95 -1,908.30
26-Oct-06 1,688.00 3677.55 -684.8 8-Dec-06 101 4015.35 -1,908.30
27-Oct-06 4,933.00 3739.35 -906 11-Dec-06 -1,526.00 3962 -1,930.70
30-Oct-06 4,967.00 3769.1 -600.9 12-Dec-06 4,223.00 3849.5 -378.4
31-Oct-06 10,172.00 3744.1 -745.2 13-Dec-06 952 3716.9 -776.3
1-Nov-06 3,238.00 3767.05 1,459.30 14-Dec-06 -969 3765.2 1,077.70
2-Nov-06 3,685.00 3791.2 -542.3 15-Dec-06 1,486.00 3843.05 2,251.80
3-Nov-06 1,391.00 3805.35 -4,020.40 18-Dec-06 -460 3888.65 6,771.00
6-Nov-06 2,274.00 3809.25 895.8 19-Dec-06 -1,827.00 3928.75 3,560.70
7-Nov-06 4,229.00 3798.75 718.4 20-Dec-06 -6,734.00 3832 3,363.60
8-Nov-06 3,355.00 3777.3 1,035.10 21-Dec-06 -3,651.00 3815.55 3,479.00
9-Nov-06 -62 3796.4 6,371.00 22-Dec-06 2,648.00 3833.5 3,478.90
10-Nov-06 5,269.00 3834.75 -2,503.60 26-Dec-06 82 3871.15 4,604.70
13-Nov-06 4,781.00 3858.75 -2,506.60 27-Dec-06 -1,530.00 3940.5 106.9
14-Nov-06 7,782.00 3865.9 -1,236.60 28-Dec-06 -3,682.00 3974.25 1,310.20
29-Dec-06 -10,497.00 3970.55 1,499.50
17-NOV-06 0 3966.4 -717.3
68
Index Index
2-Jan-07 3,319.00 4007.4 -2,318.40 19-Feb-07 6,171.00 4164.55 -1,266.00
3-Jan-07 33,533.00 4024.05 -2,318.40 20-Feb-07 2,202.00 4106.95 993.4
4-Jan-07 2,078.00 3988.8 -6,022.10 21-Feb-07 4,739.00 4096.2 993.4
5-Jan-07 -2,622.00 3983.4 -6,572.20 22-Feb-07 -402 4040 1,699.30
8-Jan-07 9 3933.4 738.9 23-Feb-07 -2,252.00 3938.95 1,712.20
9-Jan-07 -30,757.00 3911.4 678.2 26-Feb-07 42,872.00 3942 -1,004.70
10-Jan-07 -3,682.00 3850.3 431.5 27-Feb-07 -5,821.00 3893.9 -1,155.40
11-Jan-07 -11,068.00 3942.25 3,043.30 28-Feb-07 -4,157.00 3745.3 5,214.20
12-Jan-07 1,592.00 4052.45 3,043.20 1-Mar-07 -16,443.00 3811.2 178
15-Jan-07 2,070.00 4078.4 583 2-Mar-07 -4,387.00 3726.75 2,518.00
16-Jan-07 -2,389.00 4080.5 730.7 5-Mar-07 3,249.00 3576.5 2,174.30
17-Jan-07 1,013.00 4076.45 -108.4 6-Mar-07 -3,127.00 3655.65 773.4
18-Jan-07 912 4109.05 -108.4 7-Mar-07 -5,704.00 3626.85 2,526.00
19-Jan-07 1,119.00 4090.15 1,939.90 8-Mar-07 841 3761.65 240
22-Jan-07 768 4102.45 585.7 9-Mar-07 1,158.00 3718 256.5
23-Jan-07 3,198.00 4066.1 589.7 12-Mar-07 3,957.00 3734.6 1,908.00
24-Jan-07 2,691.00 4089.9 -2,275.00 13-Mar-07 2,043.00 3770.55 1,908.00
25-Jan-07 1,727.00 4147.7 -281.1 14-Mar-07 -840 3641.1 1,602.50
29-Jan-07 1,410.00 4124.45 15-Mar-07 -8,614.00 3643.6 -258
2-Feb-07 -4,697.00 4082.7 16-Mar-07 185 3608.55 686.3
5-Feb-07 6,646.00 4137.2 -281.2 19-Mar-07 21 3678.9 190
6-Feb-07 3,450.00 4183.5 34.5 20-Mar-07 -2,500.00 3697.6 929.6
7-Feb-07 6,560.00 4215.35 -238.4 21-Mar-07 1,363.00 3764.55 929.6
8-Feb-07 5,454.00 4195.9 270.5 22-Mar-07 1,645.00 3875.9 1,125.20
9-Feb-07 6,989.00 4224.25 270.3 23-Mar-07 7,131.00 3861.05 -2,511.00
12-Feb-07 2,746.00 4223.4 476.8 26-Mar-07 6,785.00 3819.95 2,026.60
13-Feb-07 2,187.00 4187.4 224.9 28-Mar-07 805 3761.1 2,049.00
14-Feb-07 -2,396.00 4058.3 1,980.80 29-Mar-07 5,202.00 3798.1 2,049.00
15-Feb-07 2,105.00 4044.55 1,980.40 30-Mar-07 -3,590.00 3821.55 0.00
31-JAN-07 0 4047.1 -1,265.00
1-FEB-07 0 4146.2 -1,265.00
69

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A Study on

IMPACT OF INSTITUTIONAL INVESTORS

Dissertations submitted in partial fulfillment of the requirements for the

KRISTU JAYANTI COLLEGE OF MANAGEMENT

Place: Bangalore (RAVI KUMAR.S)

Certified that this project entitled “Impact of Institutional Investors on Nifty

Volatility With Special Reference to FII and MF Flows” submitted in partial

At the successful completion of my project I would like to extend my gratitude to all

guidance and support throughout the project work.

I also owe my gratitude to my internal guide Dr.Madhumita. G. Majumder (Professor,

Kristu Jayanti College of Management) for valuable suggestions and guidance.

CHAPTER NO. TITLE PAGE

2 RESEARCH DESIGN 5-10

4 ANALYSIS OF IMPACT OF 35-46

5 SUMMARY OF FINDINGS, CONCLUSION AND 47-49

BIBLIOGRAPHY AND ANNEXURES

Table No. Title Page No.

4(a) Correlation analysis for the time period of 35

Graph no. Title Page no.

• FOREIGN INSTITUTIONAL INVESTORS

The term Foreign Institutional Investor is defined by SEBI as under:

Sub-account" includes those institutions, established or incorporated outside India and

• NATIONAL STOCK EXCHANGE

S&P CNX Nifty

1.1 BACKGROUND OF THE STUDY

• HISTORY OF FOREIGN PORTFOLIO INVESTMENT

2.1 STATEMENT OF THE PROBLEM

2.2 NEED FOR THE STUDY

2.7 OPERATIONAL DEFINITIONS

• FOREIGN INSTITUTIONAL INVESTOR

The term Foreign Institutional Investor is defined by SEBI as under:

• NATIONAL STOCK EXCHANGE

GLOBAL DEPOSITARY RECEIPTS

• AMERICAN DEPOSITARY RECEIPS

A negotiable certificate issued by a US bank representing specific number of shares of a

2.9 DATA COLLECTION

1 Books and Journals: Tools used for Analysis purpose.

2.10TOOLS USED FOR ANALYSIS

3.0 INSTITUTIONAL INVESTORS

1. Foreign Institutional Investors

3.1 HISTORY OF FOREIGN PORTFOLIO INVESTMENT

6. Non-resident nationals of developing countries, who could be a potential source of

3.3 FOREIGN CAPITAL FLOWS IN INDIA

3.4 SOURCES OF FII FLOW

1. US-based institutions accounted for slightly over 41%

Factors affecting FII Flows

3.5 FOREIGN INSTITUTIONAL INVESTOR

The term Foreign Institutional Investor is defined by SEBI as under:

Foreign companies/Individuals are permitted to invest in equity shares traded in Indian

3.7 INVESTMENT STRUCTURE OF FII INVESTING

Typical Structure of FII investing

• Opens and maintains foreign currency and

3.8 REGULATION RELATING TO FII OPERATION

Regulations Regarding Portfolio Investments by Foreign Institutional Investors

Eligibility Criteria to be fulfilled by the Applicant Seeking FII Registration

As per Regulation 6 of SEBI (Foreign Institutional Investors) Regulations, 1995, Foreign

 Applicant should have track record, professional competence, financial

 Securities in primary and secondary markets (listed or unlisted)

3.10 PORTFOILIO INVESTMENT BY FII’s

3.11 FOREIGN DIRECT INVESTMENTS AND PORTFOLIO INVESTMENT

Foreign Direct Investment

 A company from one country obtains controlling interest in a (new or

 Requires international transfer of funds

Mutual Fund Operation Flow Chart