Impact of FIIs and DIIs in Dynamism of Indian Capital Market

Abstract

Purpose: The purpose of this paper is to examine the effects of different sources of institutional investors – both domestic and foreign – on the dynamism of Indian capital market in the recent years.Design/Methodology/Approach: This paper begins with an understanding of what has been the trend of FIIs and DIIs flow in the Indian capital market in the last decade. In this context it has been studied that how FIIs acted as a trigger for the Sensex in the recent years. In the next section it has been attempted to look at the correlation between the FIIs/DIIs flows into the Indian capital market. Findings: This paper also proposes that the dynamics of the Foreign Institutional Investors’ (FIIs) investment in Indian capital market is queer and is different in debt and equity segments. In particular, it believes that the Domestic Institutional Investors (DIIs) provide the much needed support to the market in hours of crisis. Through statistical analysis it has been shown that though FIIs constitute a minor portion of the total market turnover their confidence levels and strategies become increasingly important to the Indian capital market.