An Empirical Study of FIIs Investment Pattern in Different Sectors and Its Impact on Sectoral Indices

Abstract

Indian stock market attracts foreign investors, since it gives high return than developed and most of the developing markets. FIIs are the investors who invest in bulk in Indian stock market. About 20 per cent of investments in Indian stock market are by FIIs. In order to know sector wise investment of FIIs and its impact on concerned sectoral index, an analysis has been made. The study was undertaken to study the trend of selected sectoral indices and FIIs investment in selected sectors and its impact on the movement of sectoral indices. The study selected Bank, Automobile, Information Technology, Capital Goods, Oil and Gas, Metal and Realty sectors and concerned sectoral indices maintained by BSE. The data related to FIIs investment in selected sectors and sectoral indices were collected on fortnightly basis from 15th January 2012 to 31st March 2014. For this purpose of analysing trend of select sector indices, the data collected for 10 years from 2004–05 to 2013–14 on yearly basis. The study applied trend analysis and correlation analysis as statistical tools. The study found that growth of the indices BSE AUTO, BSE BANKEX, BSE CG, BSE IT and BSE OG were high, the growth rate of the index BSE METAL was low and there was adverse growth in the index BSE REALTY. The study also evidenced that FIIs investment in the sectors of finance, automobile, information technology, capital goods, oil and gas and metal had significant impact on the concerned sectoral indices and the co-efficient of correlation was very high. FIIs investment in realty sector did not have significant impact on the movement of sectoral index of BSE REALTY.