Determinants of FIIs Net Investment in India

Abstract

Indian stock market has witnessed spectacular change in the recent decade. The market has undergone huge reform in the past few years. The linkage of stock market with macroeconomic variables has always been an area of interest among investors and policy makers. The stock market and its indicators in the form of indices, reflect the potential, the direction and health of the economy. There is an extensive group of macroeconomic variables that influences the stock prices in the share market. The stock market of emerging economy like India carries huge expectation of the investors. The Indian stock market improves with the increase in the inflow of foreign investment. FIIs investment is volatile by nature and also FIIs flows have positive and negative impact in the market as well as the economy. Hence, there is a need to determine the push and pull factors behind any change in the FIIs, so that it will become easy to frame the policies by considering the variables that attract foreign investment.. It becomes really important for any investor to understand the key economic factors which have high influence on FIIs investment Indian stock market improves with the increase in the inflow of foreign investment. Hence, there is a need to determine the push and pull factors behind any change in the FIIs, so that it will become easy to frame the policies by considering the variables that attract foreign investment. The foreign investor’s participation in Indian stock market increases the liquidity of local markets and lowers the cost of capital. It becomes really important for any investor to understand the key economic factors which have high influence on FIIs investment. Hence, an attempt has been made to analyse the factors determining behaviour of FIIs net investment.