To Study the Relationship between the FII Flows in Indian Stock Market and Macroeconomic Indicators using Time Series Analysis

Abstract

The growing Indian market had attracted the Foreign Institutional Investors to Indian equity market. In the recent past, Foreign Institutional Investors (FIIs) had been emerged as important players in the Indian equity market. The behavior of stock market is mostly affected by the globalization. The Foreign Investors are attracted by the Asian markets especially India due to many obvious reasons. Economies like India, which offer relatively higher growth than the developed economies, so Indian economy gained favour among investors as attractive investment destinations for foreign institutional investors (FIIs). This article makes an attempt to understand the relationship between FII in Indian stock market and the factors that makes things possible or impossible for the FIIs in India. A correlation analysis and time series analysis between FII fund flow into Indian stock market and various macroeconomic performances have a strong link between FII flows and the movement of the stock prices.