Impact of Fii on Indian Economy

5988 WordsMar 23, 201124 Pages
Institute of Professional Education and Research Macro Economics Assignment On Foreign Institutional Investment (FII) Submitted To- Submitted By- Dr. A.K. Sharan Nasir Jalal Roll No. - 29 ABSTRACT Most of the under developed countries suffer from low level of income and capital accumulation. Though, despite this shortage of investment, these countries have developed a strong urge for industrialization and economic development. As we know the need for Foreign capital arises due to shortage from domestic side and other reasons. Indian economy has experienced the problem of capital in many instances. While…show more content…
Fitz Gerald (1999) observed that the large and sudden reversals of foreign equity investments make them extremely volatile in character. The securities markets in developing countries are typically narrow and shallow, and therefore, participation of foreign portfolio investors may, a priori, induce considerable instability in these markets. Executive Summary Foreign institutional investors have gained a significant role in Indian capital markets. Availability of foreign capital depends on many firm specific factors other than economic development of the country. In this context this paper examines the contribution of foreign institutional investment particularly among companies included in sensitivity index (Sensex) of Bombay Stock Exchange. Also examined is the relationship between foreign institutional investment and firm specific characteristics in terms of ownership structure, financial performance and stock performance. It is observed that foreign investors invested more in companies with a higher volume of shares owned by the general public. The promoters’ holdings and the foreign investments are inversely related. Foreign investors choose the companies where family shareholding of promoters is not substantial. Among the financial performance variables the share returns and earnings per share are significant factors influencing their investment decision. OBJECTIVES The main objective of this assignment is to through light on FIIs into Indian economy in
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