FIIS Inflow (Equity and Debt) and its Impact on Indian Stock Market: Evidence from Sensex and Nifty50
Keywords:
Foreign Institutional Investors, SEBI, Granger’s Causality, ADF test, Nifty 50, Traded VolumeAbstract
FIIs refers an institution or an investor or investment fund established outside India which proposes to make investment in financial securities in India under the policy set by SEBI. FIIs were allowed to invest in Indian stock market after September, 1992. Although, there is a regular argument regarding the cause and effect relationship between FIIs inflow and its impact on emerging economies like India yet, it has been advised to strengthen their stock markets by facilitating the FIIs inflows. Therefore, the current study has been undertaken to understand the relationship FIIs inflow and its impact on two premier indices (Sensex and Nifty50) returns and traded volume. In order to realise the stated objectives the researchers have collected the data from capital line data base and tested for stationarity. Later a robust regression model has been run to investigate the relationship between FIIs inflow and its impact on Index return and traded volume. The study revealed that FII equity and debt inflow are statistically not significant with Sensex return. In case of traded volume, FII equity inflow is statistically significant and debt inflow is not statistically significant. However, FII equity inflow is statistically significant and debt inflow is statistically not significant with Nifty 50 returns. In case of traded volume, FII equity inflows is statistically significant and debt inflow is not statistically significant. We found a bi-directional relationship between traded volume and FII’s Equity and debt inflow with Nifty 50. In the last phase the results have been compared with the possible evidence.
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