A COMPREHENSIVE PROJECT REPORT

ON

A STUDY OF FII INFLUENCE ON BSE STOCK

MARKET.
BY
MR. VINEETH V. POLIYATH
ENROLLMENT NO: 107310592005

BATCH: 2010-13

UNDER THE GUIDANCE OF

PROF. PRANAV RAYTHATHA (Internal)

Assistant Professor, Laxmi Institute of Management, Sarigam

SUBMITTED TO
GUJARAT TECHNOLOGICAL UNIVESITY, AHMEDABAD
FOR THE AWARD OF THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

THROUGH

LAXMI VIDYAPEETH`S

LAXMI INSTITUTE OF MANAGEMENT, SARIGAM

College Code: 731 Branch Code: 92

Subject code: 84001 – Comprehensive Project
 DECLARATION

We hereby declare that the work incorporated in this grand project

report entitled ““FII’s INFLUENCE ON BSE STOCK MARKET
OVER THE PERIOD 2002-2012” is the outcome of original study
undertaken by me under the guidance of Prof. Pranav Raythatha
(Internal) Assistant Professor, Laxmi Institute of Management, Sarigam
during 14th January 2013 to 30th May 2013. This project report has not
been submitted earlier to any other University or Institution for the
award of any Degree or Diploma.

Mr. VINEETH V. POLIYATH

107310592005

BATCH: 2010-12

Laxmi Institute of Management, Page 2

 CERTIFICATE

This is to certify that the content of this grand project report entitled “FII’s
INFLUENCE ON BSE STOCK MARKET OVER THE PERIOD 2002-
2012”by Mr. Vineeth V .Poliyath, Enrollment No. 107310592005 submitted to
Gujarat Technological University, Ahmadabad for the Award of Master of
Business Administration is original research work carried out by him under my
supervision during 14th January 2013 to 30th May 2013. On the basis of the
declaration made by him I recommend this project report for the evaluation.

This report has not been submitted either partly or fully to any other University
or Institute for award of any degree or diploma.

PROF. PRANAV RAYTHATHA DR. KEYUR M. NAIK

Project Guide Director
Asst. Professor Laxmi Institute of
Laxmi Institute of Management, Management,
Sarigam Sarigam

Laxmi Institute of Management, Page 3

 INDEX
SR.
NO. PARTICULAR PAGE NO.
1 GENERAL INFORMATION 9-17
OVERVIEW OF INDIAN ECONOMY 10
2 THEORITICAL FRAMEWORK 18-33
STOCK EXCHANGE - BSE & NSE 19
FOREIGN INSTITUTIONAL INVESTORS 28
3 PRIMARY DATA 34-39
INTRODUCTION OF THE STUDY 35
LITERATURE REVIEW 37
BACKGROUND OF THE STUDY 40
4 RESEARCH METHODOLOGY 47-49
OBJECTIVE OF THE STUDY 48
SCOPE OF THE STUDY 48
METHODOLOGY OF THE STUDY 48
LIMITATION 49
5 DATA ANALYSIS & INTERPRETATION 50-72
PERFORMANCE OF Sensex 52
FII'S NET INVESTMENT V/S Sensex RETURN 55
COEFFICIENT OF CORELATION & 66
TREND ANALYSIS OF FII'S INVESTMENT 71
6 FINDING, CONCLUSION & SUGGESTION 73-80
BIBLIOGRAPHY 80

Laxmi Institute of Management, Page 4

 LIST OF TABLES

PAGE NO
TABLE NO TABLE
22
4.1 LIST OF BSE SENSEX COMPANIES
27
4.2 INTERNATIONAL STOCK EXCHANGES
52
5.1 PERFORMANCE OF SENSEX 1991-201
55
5.2 FII’s NET INFLOW FROM 2002-2012
57
5.3 FII’s NET INFLOW V/S SENSEX RETURN
60
5.4 SENSEX RETURN 2010
62
5.5 FII NET INFLOW
64
5.6 FII INFLOW V/S SENSEX RETURN
66
5.7 SENSEX FLUCTUATION

CORRELATION 67
5.8

CORRELATION 2012 69
5.9

CURRENT TREND OF FII’s INVESTMENT 71

5.10

TREND ANALYSIS-FUTURE 73
5.11

Laxmi Institute of Management, Page 5

 LIST OF CHARTS

CHART CHART NAME PAGE

NO NO
53
5.1 SENSEX 1991-2010
56
5.2 FII NET INFLOW 2002-12
58
5.3 FII INFLOW 2000-2010 V/S SENSEX
RETURN
61
5.4 SENSEX RETURN 2012
63
5.5 FII NET INFLOW 2012
65
5.6 SENSEX RFTURN V/S NET INFLOW 2012
74
5.7 TREND ANALYSIS

Laxmi Institute of Management, Page 6

 ACKNOWLEDGEMENT

The satiation and euphonies that accompany the success completion of a task would
be incomplete without a mention of people who made it possible. So, with immense
gratitude, I acknowledge all those, whose guidance and encouragement served as a
beacon light and crowned my effort with success.

I have taken efforts in this grand project. However, it would not have been possible
without the kind support and help of many individuals and organizations. I would like
to extend my sincere thanks to all of them.

We are highly indebted to Mr. Pranav Raythatha, Assistant Professer of Laxmi

Institute of Management, Sarigam for his guidance, constant help and for providing
necessary information regarding the stock market operation and various industry
sectors.

I express my thanks for his encouragement which help me in completion of this

project.

I would like to express my special gratitude to my parents who gave us continuous

support during the grand project work.

Mr. Vineeth Poliyath

107310592005

BATCH: 2010-12

Laxmi Institute of Management, Page 7

 EXECUTIVE SUMMARY

The project deals with the “Impact of Foreign Institutional Investors on Indian Stock
Market”. This research project studies the relationship between FIIs investment and
stock indices. For this purpose India’s major index i.e. BSE Sensex is selected. This
index would be used for to represent the picture of India’s stock markets. So this
project reveals the impact of FII on the Indian capital market.

There may be many other factors on which a stock index may depend i.e. Government
policies, budgets, bullion market, inflation, economic and political condition of the
country, FDI, Re./Dollar exchange rate etc. But for this study I have selected only one
independent variable i.e. FII. This study uses the concept of correlation, regression
and hypothesis to study the relationship between FII and stock index. The FII started
investing in Indian capital market from year 1991 when the Indian economy was
opened up in the same year. Their investments include equity only.

Laxmi Institute of Management, Page 8

 CHAPTER-I

GENERNAL INFORMATION

Laxmi Institute of Management, Page 9

OVERVIEW OF INDIAN ECONOMY

The Indian economy has continuously recorded high growth rates and has become an
attractive destination for investments, according to Ms Pratibha Patil, the Indian
President. "India's growth offers many opportunities for mutually beneficial
cooperation," added Ms Patil. "Today India is among the most attractive destinations
globally, for investments and business and FDI had increased over the last few years,"
said Ms Patil.

The Indian economy is expected to grow at around 7.5 per cent, according to Dr
Manmohan Singh, the Indian Prime Minister. The PM acknowledged Asia's emerging
economies were "growing well" and were, "in fact, contributing to the recovery of the
world economy".

The overall growth of gross domestic product (GDP) at factor cost at constant prices,
as per Revised Estimates, was 8.5 per cent in 2010-11 representing an increase from
the revised growth of 8 per cent during 2009-10, according to the monthly economic
report released for the month of September 2011 by the Ministry of Finance. Overall
growth in the Index of Industrial Production (IIP) was 4.1 per cent during August
2011.

The eight core Infrastructure industries grew by 3.5 per cent in August 2011 and
during April-August 2011-12, these sectors increased by 5.3 per cent. In addition,
exports and imports in terms of US dollar increased by 44.3 per cent 41.8 per cent
respectively, during August 2011.

Over the next two years India could attract foreign direct investment (FDI) worth US$
80 billion, according to a research report by Morgan Stanley. India has received US$
48 billion FDI in the last two years. Considering the pace of FDI growth in India,
KPMG officials believe that FDI in 2011-12 might cross US$ 35 billion mark.

Laxmi Institute of Management, Page 10

In addition, India has entered the club of top 20 exporters of goods and reclaimed its
position among top 10 services exporters in 2010. India's goods exports rose by 31 per
cent in 2010, helping it to improve its world ranking moving up two places to 20 from
22 in 2009.

Laxmi Institute of Management, Page 11

The Economic Scenario:

• A report titled, 'World Investment Prospects Survey 2009-2012' by the United

Nations Conference on Trade and Development (UNCTAD) has ranked India
at the second place in global foreign direct investments (FDI) in 2010 and
expects India to remain among the top five attractive destinations for
international investors during 2010-12.

• India Inc announced 177 mergers and acquisitions (M&A) deals worth US$
26.8 billion in the first nine months of 2011. For the quarter July-September
2011, inbound deals worth US$ 7.32 billion were registered as against the deals
worth US$ 2.65 billion in the previous quarter. Foreign institutional investors
(FIIs) have invested more than Rs 41,000 crore (US$ 7.81 billion) in
government papers and Rs 68,000 crore (US$ 12.95 billion) in corporate bonds
as on October 31, 2011

• The latest available data from the Reserve Bank of India show a 77 per cent
jump in the FDI in the first half of the current financial year (April-September),
compared to what was US$ 19.5 billion during the same period a year ago

• The total amount of FDI equity inflows during financial year 2011-12 from
April 2011 to September 2011 stood at US$ 19.14 billion aggregating to 74 per
cent growth over last year

• India's foreign exchange (Forex) reserves have increased by US$ 2 billion to

US$ 320 billion for the week ended October 28, 2011, on account of
revaluation of foreign currency assets, according to the weekly statistical
bulletin released by the Reserve Bank of India (RBI)

Laxmi Institute of Management, Page 12

 • The Government has approved fund raising worth Rs 60,950 crore (US$
11.61billion) by companies through external commercial borrowings (ECB) or
foreign currency convertible bonds (FCCB) for infrastructure projects in the
financial years 2009-2011

• India's merchandise exports have registered an increase of nearly 82 per cent

during July 2011 from a year ago to touch US$ 29.3 billion, according to a
release by the Ministry of Commerce and Industry. Exports during April-July
2011 reached US$ 108.3 billion, up 54 per cent over the same period a year
ago, according to Mr. Rahul Khullar, Commerce Secretary. Exports in the
referred period increased on back of demand for engineering and petroleum
products, gems and jewellery and readymade garments

• Private equity (PE) investments in India stood at US$ 6.14 billion in value
terms, while the number of deals increased by 33 per cent to 195, during
January-June 2011, according to data compiled by Chennai-based Venture
Intelligence. The rise in the value of the deals so far (June 2011) recorded a
growth of 52 per cent, as compared to US$ 4.04 billion raised last year

• The Indian metals and minerals sector has received PE investments worth US$
650 million in the first half of 2011, according to estimates by VC Edge. The
metal making industry has attracted PE players; in addition the mining assets
are also a major draw due to the sharp demand for ownership of raw materials

• India currently holds the 12th position in Asia and 68th position in the overall
list world's most attractive tourist destinations, as per the Travel and Tourism
Competitiveness Report 2011 by the World Economic Forum (WEF). A study
conducted by global hospitality services firm, HVS, to measure marketing

Laxmi Institute of Management, Page 13

 effectiveness on Internet puts Karnataka Tourism's Web site in the sixth
position in India

• The wind energy sector has attracted foreign direct investment (FDI) worth Rs
1,510 crore (US$ 287.62 million) over the past three years. In the renewable
energy sector, wind energy has emerged as the fastest growing category,
according to Dr Farooq Abdullah, Union Minister for New and Renewable
Energy

Furthermore, the Indian Railways has generated Rs 37,392.88 crore (US$ 7.12 billion)
of revenue earnings from commodity-wise freight traffic during April-October 2011
as compared to Rs 34,337.11 crore (US$ 6.54 billion) during the corresponding period
last year, registering an increase of 8.90 per cent. Railways carried 536.92 million tons
(MT) of commodity-wise freight traffic during April-October 2011 as compared to
516.89 MT carried during the corresponding period last year, registering an increase
of 3.88 per cent.

Laxmi Institute of Management, Page 14

Growth Potential Story:
• India's exports grew by 36.3 per cent in September 2011, demonstrating
impressive growth. Exports stood at US$ 24.8 billion compared to US$ 18.2
billion in the same period last year, while imports grew by 17.2 per cent to
record US$ 34.5 billion.

• Exports from special economic zones (SEZs) during April-September 2011

increased by 26.2 per cent to Rs 176,479.69 crore (US$ 33.62 billion), as per a
statement by the Export Promotion Council for EOUs and SEZs (EPCES).

• Andhra Pradesh (AP) with 75 notified special economic zones (SEZs), which is
the highest number of SEZs in any State in India, has attracted investment of
approximately Rs 15,000 crore (US$ 2.86 billion)

• The July-September 2011 quarter observed an increase in foreign institutional

investor (FII) stakes in major automakers as compared to the previous quarter
of 2011

• Information technology (IT) spending in India by enterprises will rise by 9.1

per cent in 2012, according to a report by research firm Gartner. IT spending in
India is projected to touch US$ 79.8 billion in 2012 as compared to US$ 73.1
billion in 2011. The telecommunications market is the largest IT segment in
India with IT spending forecast to reach US$ 54.7 billion in 2012, followed by
the IT services market with spending of US$ 11.1 billion. The computing
hardware market in India is projected to reach US$ 10.7 billion in 2012, while
software spending will total to US$ 3.2 billion, reported Gartner

• The Government plans to set up an Rs 2,500 crore (US$ 476.19 million)

development fund for the auto component sector. The industry, which aims to
almost triple its size to US$ 115 billion by 2020, envisages annual capital
investment of up to US$ 3 billion

• India is the 9th or 10th largest car maker in the world, but given its very
ambitious production plans, in the next five to ten years it will jump to the third
or fourth spot, according to Diane H Gulyas, President, DuPont Performance

Laxmi Institute of Management, Page 15

 Polymers. The firm's Innovation Centre will focus on automobile trends
working towards making vehicles faster, lighter, safer and fuel efficient

• The Rs 15,000 crore (US$ 2.86 billion) Indian forging industry is poised to
grow over 20 per cent per year and see investments of about US$ 3 billion by
2015 for capacity expansion, according to the Association of Indian Forging
Industry.

• A public-private partnership (PPP) fund worth Rs 5,000 crore (US$ 952.38

million) is being set up to support research and development efforts-especially
in the field of vaccines, drugs and pharmaceuticals, supercomputing, solar
energy and electronic hardware-as well as commercialization of products and
services, according to Mr. Ashwani Kumar, Minister of State for Science &
Technology.

• In addition, the Indian banking sector is poised to become the world's third-
largest in terms of assets over the next 14 years—with its assets poised to touch
US$ 28,500 billion by 2025—according to a report titled ‘Being five-star in
productivity — Roadmap for excellence in Indian banking', prepared for the
Indian Banks' Association (IBA) by The Boston Consultancy Group (BCG),
IBA and an industry body.

• Investment in logistics sector in India is projected to grow annually at 10 per

cent. India's logistics market achieved revenues of US$ 82.1 billion in 2010
and is expected to reach revenue worth US$ 90 billion in 2011. The logistics
industry forecasts to generate revenues worth US$ 200 billion by 2020, as per
Eredene Capital PLC's 2010-11 annual report.

• India's engineering research and development (ER&D) providers is estimated

to capture about 40 per cent share of global offshore revenues in 11 key
verticals by 2020, according to a new report titled 'The Futures Report 2011',
by Global Futures and Foresight (GFF).

Laxmi Institute of Management, Page 16

 • India's power sector will generate revenue of Rs 1,300,000 crore (US$ 247.62
billion) during the Twelfth Five Year Plan (2012-17), as per Mr. P Uma
Shankar, Secretary, Ministry of Power. The plan is to generate 17,000 MW
power during the referred period

• The food processing industry is set to triple to reach US$ 900 billion by 2020,
provided the key issues are addressed, as per a study by Boston Consulting
Group (BCG) and an industry body.

• The National Agricultural Innovation Programme (NAIP) will spend Rs 500

crore (US$ 95.24 million) more in the next two years on different projects to
add value to agriculture and allied sectors. This programme aims at developing
technology-based innovations to improve the income of farmers and those
living on allied sectors.

• Gaining momentum from fashion trends, many Indian consumers now spend an
equivalent amount on footwear as on their apparels, as they associate variety of
shoes to different occasions. The footwear industry in India has almost doubled
in the past five years to an estimated Rs 20,000 crore (US$ 3.81 billion).

Laxmi Institute of Management, Page 17

 CHAPTER- II
THEORETICAL FRAMEWORK

Laxmi Institute of Management, Page 18

2.1 STOCK EXCHANGE:

Stock Exchange is an organized marketplace where securities are traded. These

securities are by the government, semi-government Bodies, Public sector undertakings
and companies for borrowing funds and raising resources. Securities are defined as
monetary claims and include stock, shares, debentures, bonds etc. If these securities
are marketable as in the case of Government stock, they are transferable by
endorsement and are like movable property. Under the securities Contract Regulation
Act of 1956, securities trading are regulated by the Central Government and such
trading can take place only in Stock Exchange recognized by the Government under
this Act. At present there are 23 recognized stock Exchanges in India.

Indian Stock Markets are one of the oldest in Asia. Its history dates back to
nearly 200 years ago.

BOMBAY STOCK EXCHANGE:

Bombay Stock Exchange is the oldest stock exchange in Asian with a rich
heritage, now spanning three centuries in its 133 years of existence. What is now
popularly known as BSE was established as “The Native Share & Stock Brokers’
Association” in 1875. BSE is the first stock exchange in the country which obtained
permanent recognition (in 1956) from the government of India under the Securities
Countracts (Regulation) Act 1956. BSE’s pivotal and pre-eminent role in the
development of the Indian capital market is widely recognized. It migrated from the
open outcry system to an online screen- based order driven trading system in 1955.
Earlier an Association Of Persons (AOP), BSE is now a corporatized and
demutualised entity incorporated under the provisions of the companies Act, 1956,
pursuant to the BSE (Corporatization and Demutualization) Scheme, 2005 notified by
the Securities and Exchange Board of India (SEBI). With demutualization, BSE has
two of world’s best exchanges, Deutsche Borse and Singapore Exchange, as its
strategic partners. Over the past 133 years, BSE has facilitated the growth of the

Laxmi Institute of Management, Page 19

Indian corporate sector by providing it with an efficient access to resources. There is
perhaps no major corporate in India which has not sourced BSE’s services in raising
resources from the capital market.

Today, BSE is the world’s number 1 exchange in terms of the number of listed
companies and the world’s 5th in transaction numbers. The market capitalization as on
December 31, 2007 stood at USD 1.79 trillion. An inventor can choose from more
than 4700 listed companies, which for easy reference, are classified into A, B, S, T
and Z groups.The BSE Index, SENSEX, is Indian’s first stock market index that
enjoys an iconic stature, and is tracked worldwide. It is an index of 30 stocks
representing 12 malor sectors. The SENSEX is constructed on a ‘free-float’
methodology, and is sensitive to market sentiments and market realities. Apart from
the SENSEX, BSE offers 21 indices, including 12 sectoral indicates. BSE has entered
into an index cooperation agreement with Deutsche Borse. This agreement has made
SENSEEX and other BSE indices available to investors in Europe and America.
Moreover, Barclays Global Investors (BGI), the global leader in ETF’S through its
Trader which tracks the SENSEX. The ETF enables investors in Hong Kong to take
an exposure to the Indian equity market. BSE provides an efficient and transparent
market for trading in equity, debt instruments and derivatives. It has a nation- wide
reach with a pressure in more than 450 cities and towns of India. BSE has always been
at par with the international standards. The systems and processes are designed to
safeguard market integrity and enhance transparency in operations.BSE is the first
exchange in India and the second is the world to obtain an ISO 9001:2000
certification. It is also the first exchange in India and the second in the world to
receive Information Security Management System Standard BS 7799-2-2002
certification for its BSE On-line Trading System (BOLT).BSE continues to innovate.
In recent times, it has become the first national level stock exchange to launch its
website in Gujarati and Hindi to reach out to a large number of investors. It has
successfully launched a reporting platform for corporate bonds in India christened the
ICDM or Indian Corporate Dept Market and a unique ticker screen aptly named ‘BSE
Broadcast’ which enables information dissemination to the common man on the street.
In 2006, BSE launched the Directors Database and ICERS (India Corporate Electronic

Laxmi Institute of Management, Page 20

Reporting System) to facilitate information flow and increase transparency in Indian
capital market. While the Directors database provides a single-point access to
information in the boards of directors of listed companies, the ICERS facilities the
corporate in sharing with BSE their corporate announcements. BSE also has a wide
range of services to empower investors and facilitate smooth transactions:

Investors Services: The Department of Investor Services redresses grievances of

investors. BSE was the first exchange in the country to provide an amount of Rs.1
million towards the investor protection fund; it is an amount higher than that of any
exchange in the country. BSE launched a nationwide investor awareness programme-
‘safe investing in the Stock Market’ under which 264vprogrammes were held in more
than 200 cities. The BSE On-line Trading (BOLT): BSE On-line Trading (BOLT)
facilitates on-line screen based trading in securities. BOLT is currently operating in
25,000 Trader Workstations located across over 450 cities in India.

BSEWEBX.com: In February 2001, BSE introduced the world’s first centralized

exchange-based Internet trading system, BSEWEBX.com. This initiative enables
investors anywhere in the world to trade on the BSE platform.

Surveillance: BSE’s On-line Surveillance System (BOSS) monitors on a real-time

basis the price movements, volume positions and members’ positions an real-time
measurement of default risk, market reconstruction and generation of cross market
alerts.

BSE Trading Institution: BTI imparts capital market trading and certification, in
collaboration with reputed management institutes and universities. It offers over 40
courses on various aspects of the capital market and financial sector. More than
20,000 people have attended the BTI programmes.

Laxmi Institute of Management, Page 21

Companies in the Sensex
List of BSE Sensex companies provides the full list of companies that have been part
of the BSE Sensex since its inception in 1986 (base lined to 1979).
Adj. Weight in
Code Name Sector
Factor Index(%)
500410 ACC Housing Related 0.55 0.77
500103 BHEL Capital Goods 0.35 3.26
532454 Bharti Airtel Telecom 0.35 3
532868 DLF Universal Limited Housing related 0.25 1.02
500300 Grasim Industries Diversified 0.75 1.5
500010 HDFC Finance 0.90 5.21
500180 HDFC Bank Finance 0.85 5.03
500182 Hero Honda Motors Ltd. Transport Equipments 0.50 1.43
Metal,Metal Products &
500440 Hindalco Industries Ltd. 0.7 1.75
Mining
Hindustan Lever
500696 FMCG 0.50 2.08
Limited
532174 ICICI Bank Finance 1.00 7.86
500209 Infosys Information Technology 0.85 10.26
500875 ITC Limited FMCG 0.70 4.99
532532 Jaiprakash Associates Housing Related 0.55 1.25
500510 Larsen & Toubro Capital Goods 0.90 6.85
Mahindra & Mahindra
500520 Transport Equipments 0.75 1.71
Limited
532500 Maruti Suzuki Transport Equipments 0.50 1.71
532541 NIIT Technologies Information Technology 0.15 2.03
532555 NTPC Power 0.15 2.03
500304 NIIT Information Technology 0.15 2.03

Laxmi Institute of Management, Page 22

500312 ONGC Oil & Gas 0.20 3.87
Reliance
532712 Telecom 0.35 0.92
Communications
500325 Reliance Industries Oil & Gas 0.50 12.94
500390 Reliance Infrastructure Power 0.65 1.19
500112 State Bank of India Finance 0.45 4.57
Metal, Metal Products,
500900 Sterlite Industries 0.45 2.39
and Mining
Sun Pharmaceutical
524715 Healthcare 0.40 1.03
Industries
Tata Consultancy
532540 Information Technology 0.25 3.61
Services
500570 Tata Motors Transport Equipments 0.55 1.66
500400 Tata Power Power 0.70 1.63
Metal, Metal Products &
500470 Tata Steel 0.70 2.88
Mining
507685 Wipro Information Technology 0.20 1.61

TABLE NO 4.1

• DLF replaced Dr. Reddy's Lab on November 19, 2007.

• Jaiprakash Associates Ltd replaced Bajaj Auto Ltd on March 14, 2008.
• Sterlite Industries replaced Ambuja Cements on July 28, 2008.
• Tata Power Company replaced Cipla Ltd. on July 28, 2008.
• Sun Pharmaceutical Industries replaced Satyam Computer Services on January
8, 2009
• Hero Honda Motors Ltd. replaced Ranbaxy on June 29, 2009
• Cipla to replace Sun Pharma from May 3, 2010
• Grasim replaced JSPL in 2010

Laxmi Institute of Management, Page 23

13. SECTORS OF BSE

• HC (health care)
• REALITY
• AUTO
• METAL
• IT
• CG (capital goods)
• ONG (oil and gas)
• POWER
• PSU
• CD (consumer durables)
• BANK
• TECH
• FMCG

NAME OF BSE 30 COMPANIES

ACC, BHARTI AIRTEL, BHEL, DLF, GRASIM, HDFC, HDFC BANK,

HINDALCO, HUL, ICICI BANK, INFOSYS, ITC, JAIPRAKASH
ASSOCIATES, L&T, MAHINDRA & MAHINDRA, MARUTI SUZUKI, ONGC,
NTPC, RANABAXY LAB, RELIENCE, RELIENCE COMM, RELIENCE
INFRASTRUCTURE, SATYAM, SBI, STERLITE INDUSTRY, TATA MOTORS,
TATA POWER, TATA STEEL. TCS, WIPRO.

(AS ON- FEB 15,2011)

Laxmi Institute of Management, Page 24

NATIONAL STOCK EXCHANGE (NSE):
With the liberalization of the Indian economy, it was found inevitable to lift the
Indian stock market trading system on par with the international standards. On the
basis of the recommendations of high-powered Pherwani Committee, Industrial
Development Bank of India, Industrial Credit and Investment Corporation of India,
Industrial Finance Corporation of India, all Insurance Corporations, selected
commercial banks and others incorporated the National Stock Exchange in 1992.
Trading at NSE can be classified under two broad categories:
(a) Wholesale debt market and
(b) Capital market.

There are two kinds of players in NSE:

(a) Trading members and
(b) Participants.
Trading at NSE takes place through a fully automated screen-based trading
mechanism, which adopts the principle of an order-driven market. Trading members
can stay at their offices and execute the trading, since they are linked through a
communication network. The prices at which the buyer and seller are willing to
transact will appear on the screen. When the prices match the transaction will be
completed and a confirmation slip will be printed at the office of the trading member.
NSE has several advantages over the traditional trading exchanges. They are as
follows:
NSE brings an integrated stock market trading network across the nation.
Investors can trade at the same price from anywhere in the country since inter-
market operations are streamlined coupled with the countrywide access to the
securities.
Delays in communication, late payments and the malpractice's prevailing in the
traditional trading mechanism can be done away with greater operational
efficiency and informational transparency in the stock market operations, with
the support of total computerized network.

Laxmi Institute of Management, Page 25

List of Top 50 Companies of NSE
(National Stock Exchange)

• RELIANCE INDUSTRIES LTD, OIL AND NATURAL GAS

CORPORATION LTD, BHARTI AIRTEL LIMITED, NTPC LTD,
RELIANCE COMMUNICATIONS LTD., ICICI BANK LTD,
• INFOSYS TECHNOLOGIES LTD, TATA CONSULTANCY SERVICES
LTD, BHEL, STATE BANK OF INDIA,
• STEEL AUTHORITY OF INDIA, LARSEN & TOUBRO LTD., HERO
HONDA MOTORS LTD, ZEE ENTERTAINMENT LTD, INDIAN
PETROCHEMICALS CORPORATION LTD., CIPLA LTD, BHARAT
PETROLEUM CORPORATION LTD.,VIDESH SANCHAR NIGAM LTD,
DR. REDDY'S LABORATORIES,
• MAHANAGAR TELEPHONE NIGAM LTD, GLAXOSMITHKLINE
PHARMA LTD.,ABB LTD. POWER GRID CORPORATION OF INDIA,
RELIANCE ENERGY LTD, SIEMENS LTD, ACC LIMITED, AMBUJA
CEMENTS LTD,
• HCL TECHNOLOGIES LTD, HINDALCO INDUSTRIES LTD,
• NATIONAL ALUMINIUM CO LTD, SUN PHARMACEUTICALS IND.,
• MAHINDRA & MAHINDRA LTD, TATA POWER CO LTD, PUNJAB
NATIONAL BANK, RANBAXY LABS LTD, ITC LTD, RELIANCE
PETROLEUM LTD., HDFC LTD, WIPRO LTD, STERLITE INDUSTRIES
LTD.,
• HDFC BANK LTD, TATA STEEL LIMITED, HINDUSTAN UNILEVER
LTD., SUZLON ENERGY LIMITED, GAIL (INDIA) LTD, GRASIM
INDUSTRIES LTD, TATA MOTORS LIMITED, MARUTI UDYOG
LIMITED

(AS ON- FEB 15,2011)

Laxmi Institute of Management, Page 26

INTERNATIONAL STOCK EXCHANGES (TABLE NO 4.2)

Rank Economy Stock Exchange Market Trade

Capitalization Value
(USD Billions) (USD
Billions)

1 United States New York Stock 13041 1439

Exchange
2 United States NASDAQ 3649 954

3 Japan Tokyo Stock 3542 311

Exchange
4 United London Stock 3354 229
Kingdom Exchange
5 Hong Kong Hong Kong Stock 2696 179
Exchange
6 Europe Euronext 2695 165
7 China Shanghai Stock 2681 686
Exchange
8 Canada Toronto Stock 2002 134
Exchange
9 India Bombay Stock 1540 231
Exchange
10 India National Stock 1503 791
Exchange of India
11 Brazil BM&F Bovespa 1447 704
12 Germany Deutsche Börse 1320 123
13 Australia Australian 1309 101
Securities Exchange
14 China Shenzhen Stock 1284 548
Exchange
15 Switzerland SIX Swiss 1122 674
Exchange
16 Spain BME Spanish 1077 149
Exchanges
Americas 21244 2617
Asia - Pacific 18287 2262
Europe - Africa - Middle 13975 954
East
Total 51752 5833

Laxmi Institute of Management, Page 27

2.2 INTRODUCTION TO FII

International portfolio flows, as are commonly known as Foreign Institutional

Investment (FII) flows, refer to capital flows made by individual and institutional
investors across national borders with a view to creating an internationally diversified
portfolio.

‘FII’ include “Overseas pension funds, mutual funds, investment trust, asset
management company, nominee company, bank, institutional portfolio manager,
university funds, endowments, foundations, charitable trusts, charitable societies, a
trustee or power of attorney holder incorporated or established outside India proposing
to make proprietary investments or investments on behalf of a broad-based fund.

Foreign institutional investor means an entity established or incorporated

outside India which proposes to make investment in India. Positive tidings about the
Indian economy combined with a fast-growing market have made India an attractive
destination for foreign institutional investors.

Unlike Foreign Direct Investment (FDI) flows which refer to that category of
international investment aimed at obtaining a lasting interest by a resident entity in
one economy in an enterprise resident in another economy by way of exercising
significant control over its management, FII flows are not directed at acquiring
management control over foreign companies. FII flows were almost non-existent until
1980s. Global capital flows were primarily characterized by syndicated bank loans in
1970s followed by FDI flows in 1980s.

But a strong trend towards globalization leading to widespread liberalization

and implementation of financial market reforms in many countries of the world had
actually set the pace for FII flows during 1990s.

Laxmi Institute of Management, Page 28

 According to Bekaert and Harvey (2000), FII investment as a proportion of a
developing country's GDP increases substantially with liberalization as such
integration of domestic financial markets with the global markets permits free flow of
capital from 'capital-rich' to 'capital-scarce' countries in pursuit of higher rate of return
and increased productivity and efficiency of capital at global level.

Diversifying internationally i.e., holding a well-diversified portfolio of

securities from around the world in proportion to market capitalizations, irrespective
of the investor's country of residence, has long been advocated as the means to reduce
overall portfolio risk and maximize risk-adjusted returns by the classical capital asset
pricing model (CAPM). But a persistent 'home bias' (i.e., the tendency to hold a
greater proportion of stocks from the home country vis-a-vis the foreign country) was
noticed in the portfolios of investors in capital-rich industrialized countries in early
1990s.
With more and more emerging market economies (EMEs) 1 deregulating their
financial markets by eliminating foreign exchange controls, reducing taxes imposed
on foreign investors, relaxing the restrictions on the purchase / sale of securities by
foreign investors in domestic markets etc., such 'home bias' has decreased over the
years. Today, EMEs, by virtue of their lower correlations in stock market returns with
the developed markets, offer greater scope to investors in developed countries to
reduce their overall portfolio risk and effectively enhance the portfolio performance
and hence have become the most preferred destinations for FII flows.

Several research studies on FII flows to EMEs over the world have highlighted
that financial market infrastructure such as the market size, market liquidity, trading
costs, extent of information dissemination etc., legal mechanisms relating to property
rights etc., harmonization of corporate governance, accounting, listing and other rules
with those followed in developed markets, and strengthening of securities markets'
enforcement are important determinants of foreign portfolio investments into
emerging markets. Of late, the Securities and Exchange Board of India (SEBI) and
Reserve Bank of India (RBI) have initiated a string of measures like allowing overseas

Laxmi Institute of Management, Page 29

pension funds, mutual funds, investment trusts, asset management companies, banks,
institutional portfolio managers, university funds, endowments, foundations or
charitable trusts etc. but banning non-resident Indians (NRIs) and overseas corporate
bodies (OCBs) from trading as foreign portfolio investors, raising the caps for FII
from 24% to 49% of a non-bank company's issued capital subject to sectoral caps /
statutory ceiling as applicable, enhancing the individual investment limit from 5% to
10% of issued capital, permitting foreign investors to trade in Government securities
and derivatives, easing the norms for FII registration, reducing procedural delays,
lowering fees, mandating stricter disclosure norms, improved regulatory standards etc.
with a view to improving the scope, coverage and quality of FII flows into India. As a
result, India, also supported by her strong economic fundamentals, has become one of
the attractive destinations for FII flows in the emerging market space today. The
expansionary effect of various reform measures on FII flows over the years can be
gauged from the fact that net (i.e., gross purchases minus gross sales) FII flows into
India have risen sharply from Rs. 5126 crore in 1993-1994 2 to Rs. 46,215 crore in
2004-2005, with the number of foreign institutional investors being registered with
SEBI increasing from 3 in 1993-1994 to 685 in 2004-2005 (Source : SEBI website).
This increasing dominance of foreign investors in Indian market has necessitated
research on the implications of FII flows for the Indian stock market time and again.

Although FII flows help supplement the domestic savings and augment
domestic investments without increasing the foreign debt of the recipient countries,
correct current account deficits in the external balance of payments' position, reduce
the required rate of return for equity, and enhance stock prices of the host countries,
yet there are worries about the vulnerability of recipient countries' capital markets to
such flows. FII flows, often referred to as 'hot money' (i.e., short-term and overly
speculative), are extremely volatile in character compared to other forms of capital
flows.

Laxmi Institute of Management, Page 30

 Foreign portfolio investors are regarded as 'fairweather friends' who come in
when there is money to be made and leave at the first sign of impending trouble in the
host country thereby destabilizing the domestic economy of the recipient country.
Often, they have been blamed for exacerbating small economic problems in the host
nation by making large and concerted withdrawals at the slightest hint of economic
weakness. It is also alleged that as they make frequent marginal adjustments to their
portfolios on the basis of a change in their perceptions of a country's solvency rather
than variations in underlying asset value, they tend to spread crisis even to countries
with strong fundamentals thereby causing 'contagion' in international financial
markets (FitzGerald,1999).

TRENDS OF FOREIGN INSTITUTIONAL INVESTMENTS IN INDIA.

Portfolio investments in India include investments in American Depository Receipts

(ADRs)/ Global Depository Receipts (GDRs), Foreign Institutional Investments and
investments in offshore funds. Before 1992, only Non-Resident Indians (NRIs) and
Overseas Corporate Bodies were allowed to undertake portfolio investments in India.
Thereafter, the Indian stock markets were opened up for direct participation by FIIs.
They were allowed to invest in all the securities traded on the primary and the
secondary market including the equity and other securities/instruments of companies
listed/to be listed on stock exchanges in India

• In 2004, FII investments crossed $9 billion, the highest in the history of Indian
capital markets.

• The total net investment for the year up to December 29 stood at US$9,072 million
while foreign investors pumped in about US$2,113 million in December.

• Korea and Taiwan have always been the biggest recipients of FII money. It was only
in 2004 that India managed to receive the second highest FII inflow at over $8.5bn.

Laxmi Institute of Management, Page 31

• In 2005 FIIs invested more in Indian equities than in Korean or Taiwanese equities.

• On 9th March 2009, India's exceptional growth story and its booming economy have
made the country a favourite destination with foreign institutional investors (FIIs). It
has continued to attract investment despite the Satyam non-governance issue and the
global economic contagion impact on Indian markets.

• They are also the most successful portfolio investors in India with 102 per cent

Appreciation since September 30, 2003.

• As per SEBI, number of registered FIIs stood at 1626 and number of registered sub-
accounts stood at 4972 as on March 17, 2009

Prohibitions on Investments:

Foreign Institutional Investors are not permitted to invest in equity issued by an Asset
Reconstruction Company. They are also not allowed to invest in any company which
is engaged or proposes to engage in the following activities:

• Business of chit fund

• Nidhi Company
• Agricultural or plantation activities
• Real estate business or construction of farm houses (real estate business does
not include development of townships, construction of residential/commercial
premises, roads or bridges).
• Trading in Transferable Development Rights (TDRs).

Laxmi Institute of Management, Page 32

FUTURE PROSPECTS OF FOREIGN INSTITUTIONAL INVESTMENTS:

• Sustaining the growth momentum and achieving an annual average growth of

9-10 % in the next five years.
• Simplifying procedures and relaxing entry barriers for business activities and
Providing investor friendly laws and tax system.
• Checking the growth of population; India is the second highest populated
country in the world after China. However in terms of density India exceeds
China, as India's land area is almost half of China's total land. Due to a high
population growth, GNI per capita remains very poor. It was only $ 2880 in
2003 (World Bank figures).
• Boosting agricultural growth through diversification and development of agro
processing.
• Expanding industry fast, by at least 10% per year to integrate not only the
surplus labour in agriculture but also the unprecedented number of women and
teenagers joining the labour force every year.
• Developing world-class infrastructure for sustaining growth in all the sectors

• Allowing foreign investment in more areas.

• Effecting fiscal consolidation and eliminating the revenue deficit through

revenue enhancement and expenditure management.

Market Outcome in the previous years

Foreign Portfolio investments in India come in the form of investments in American

Depository Receipts (ADRs)/ Global Depository Receipts (GDRs), Foreign
Institutional Investments and investments in Offshore funds.

However, FIIs constitute a major proportion of such portfolio. The share of FIIs in
total portfolio flows was as high as 95.97% in 2003-04 and 93.25% in 2004-05. It
declined to 46% in 2006-07. This decline in FII investment in 2006-07 can be

Laxmi Institute of Management, Page 33

attributed to global developments like meltdown in global commodities markets and
equity market during the three month period between May 2006 to July 2006, fall in
Asian Equity markets, tightening of capital controls in Thailand and its spillover
effects.

The share of FII investment in total portfolio investment for 2007-08 is provisionally
estimated to be 69.15%. The large FII inflows (net) in 2007-08 at USD 16 billion as
against USD 6.7 billion in 2006-07 reflects increased participation of FIIs in the
primary market as corporates raised large resources through 85 initial public offerings
(IPOs) and 7 follow-on public offers (FPOs) aggregating to Rs 545,110 million. (US $
13,638 million).

Looking at monthly trend in FII investments during 2007-08 it can be seen that net
FII investment has been positive during most of the months. The months of August
2007, November 2007, January, 2008 and March, 2008 saw net outflows of FII
investment, with the largest pull out of US $ 2727 mn in January, 2008.

During 2008-09, till June 2008, FIIs have been net sellers to the tune of US $ 4,189
million. This can be attributed to the generally weak sentiments of investors following
the global credit crisis which has engulfed the developed countries and is seen to be
affecting the developing countries as well.

Laxmi Institute of Management, Page 34

 CHAPTER III
PRIMARY STUDY

Laxmi Institute of Management, Page 35

INTRODUCTION OF THE STUDY

“ FII’s influence on the Sensex over the period 2000-2010 ”- is a study of the
influence of FOREIGN INSTITUTIONAL INVESTERS whose activities play a vital
role in the ups and downs of the share market. The study is conducted on the Indian
stock exchange market ( BSE SENSEX) .
There are conflicting theories on the issue of whether FII flows affect or are affected
by domestic stock market returns. So, the present empirical study has been undertaken
to throw some light on the direction of causality between FII flows and Indian stock
market returns using data on both the variables from over the period 2002-
2012.International portfolio flows, as are commonly known as Foreign Institutional
Investment (FII) flows, refer to capital flows made by individual and institutional
investors across national borders with a view to creating an internationally diversified
portfolio. Unlike Foreign Direct Investment (FDI) flows which refer to that category
of international investment aimed at obtaining a lasting interest by a resident entity in
one economy in an enterprise resident in another economy by way of exercising
significant control over its management, FII flows are not directed at acquiring
management control over foreign companies. FII flows were almost non-existent until
1980s.
With more and more emerging market economies (EMEs), deregulating their
financial markets by eliminating foreign exchange controls, reducing taxes imposed
on foreign investors, relaxing the restrictions on the purchase / sale of securities by
foreign investors in domestic markets etc. they are increasing in number. Foreign
Institutional Investment (FII) flows, i.e., capital flows across national borders, to
emerging market economies (EMEs) have risen sharply over the past one and half
decade due to globalization and India is no exception in this regard. However, there is
a lot of apprehension regarding the volatile nature of such flows thereby raising
questions about the need to encourage FII flows in a narrow and shallow stock market
like that of India.

Laxmi Institute of Management, Page 36

LITERATURE REVIEW

Purendra Verma (2002) has investigated the impact of FII on Capital Market to
find the relation between FII and Stock indices. For this he has taken seven indices
into consideration, out of them five are Consumer Durables, Capital Goods, Fast
Moving Consumer Goods, Health Care, Information Technology and the other two are
Sensex and Nifty. He observed these indices during January 1993 to September 2001.
If BSE & Nifty increase with rise in FII investment, He has taken hypothesis for this
study. To find out the results he used least square method. Finally, after completing
his study he concluded that except IT sector on all other indices the impact is very low
during January 1993 to September 2001 as the correlation is negative in Consumer
Durables, Capital Goods, Fast Moving Consumer Goods, Health Care, Sensex and
Nifty. Paramita Mukherjee, Suchismita Bose and Dipankar Coondoo (2002) carried
out research on the topic Foreign Institutional Investment in The Indian Equity Market
an Analysis of daily flows during Jan 1999 - May 2002. The paper was conducted to
understand the relationship of foreign institutional investment (FII) flows to the
Indian equity market. FII flows to and from the Indian market tend to be caused by
return in the domestic equity market and not the other way round. Returns in the
equity market are very important to influence the flows of FIIs in the country. They
concluded that in India the prime focus should be on regaining investor’s confidence
in the equity market so as to strengthen the domestic investor’s base of the market.

S.S.S. Kumar (2005) of IIM-Kozhikode carried out research on the Role of

Institutional Investors in Indian Stock Market during 1992 - 2005. The paper was
conducted to examining whether the institutional investors, with their war chests of
money, set the direction to the market. He concluded with the use of Regression
analysis that the combined force of the FIIs and MF are a powerful force and in fact
their direction can forecast market direction. It gives it
constantly rise in Indian context since all their trades are delivery based and
Market become more efficient with the growing presence of institutional investors
who primarily go by fundamentals.

Laxmi Institute of Management, Page 37

 Anand Bansal and J.S. Pasricha (2009) in the paper titled Foreign Institutional
Investor’s Impact on Stock Prices in India for the purpose of analyzing Impact of FIIs
entry and the stock market behavior. Average return before and after the event day has
been calculated for different sub sample days, the change of volatility in the Indian
stock prices has been examined by comparing the variance of the returns of sub
sample days before and after the event day. They concluded that return declined
reasonably after the entry of FIIs, the correlation between FIIs investments and market
volatility and market return has been comparatively low. It means volatility in Indian
market is not the function of FIIs investment flows.

TIMS Batch 2008-10, Leena Kanjani, Sulabh Mehta, Anita Pariyani, Amin
Pattani, Mehul Rakholiya & Krishna Vyas conducted a research study on FII in India,
they analyzed the monthly movement of stock market from 2006 to 2009. The paper
was conducted to understand influence of FII on movement of Indian Stock market
and to understand the FII policy in India.They used Correlation and Hypothesis test
methodology and concluded that FII did have significant impact on Sensex but there is
less co-relation with Benkex and IT.

Sandhya Ananthanarayanan from CRISIL, Chandrasekhar Krishnamurti from

Department of Finance and Nilanjan Sen from Nanyang Technological University
conducted this research of Foreign Institutional Investors and Security Returns:
Evidence from Indian Stock Exchanges for understanding the impact of trading of
Foreign Institutional Investors on the major stock indices of India. Their contribution
to this growing literature pertaining to globalization is twofold. First, they separate the
flows into expected and unexpected and found that unexpected flows have a greater
impact than expected flows. Second, they identify the specific flows of foreign
institutional investors flowing into (or out of) each exchange and examine the impact
on the specific stock market indices. Their principal conclusions are as follows. They
found strong evidence consistent with the base-broadening hypothesis consistent with
prior work. They do not found compelling confirmation regarding momentum or

Laxmi Institute of Management, Page 38

contrarian strategies being employed by foreign institutional investors. Their findings
supported the price pressure hypothesis. They do not found any substantiation to the
claim that foreigners’ destabilize the market.

Laxmi Institute of Management, Page 39

BACKGROUND OF THE STUDY

“FII’s influence on the Sensex over the period 2000-2010”- is a study of the
influence of FOREIGN INSTITUTIONAL INVESTERS whose activities play a vital
role in the ups and downs of the share market. The study is conducted on the Indian
stock exchange market (BSE SENSEX) .

There are conflicting theories on the issue of whether FII flows affect or are affected
by domestic stock market returns. So, the present empirical study has been undertaken
to throw some light on the direction of causality between FII flows and Indian stock
market returns using data on both the variables from over the period 2000- 2010.

International portfolio flows, as are commonly known as Foreign Institutional

Investment (FII) flows, refer to capital flows made by individual and institutional
investors across national borders with a view to creating an internationally diversified
portfolio. Unlike Foreign Direct Investment (FDI) flows which refer to that category
of international investment aimed at obtaining a lasting interest by a resident entity in
one economy in an enterprise resident in another economy by way of exercising
significant control over its management, FII flows are not directed at acquiring
management control over foreign companies. FII flows were almost non-existent until
1980s.

With more and more emerging market economies (EMEs), deregulating their
financial markets by eliminating foreign exchange controls, reducing taxes imposed
on foreign investors, relaxing the restrictions on the purchase / sale of securities by
foreign investors in domestic markets etc. they are increasing in number.

Laxmi Institute of Management, Page 40

Foreign Institutional Investment (FII) flows, i.e., capital flows across national borders,
to emerging market economies (EMEs) have risen sharply over the past one and half
decade due to globalization and India is no exception in this regard. However, there is
a lot of apprehension regarding the volatile nature of such flows thereby raising
questions about the need to encourage FII flows in a narrow and shallow stock market
like that of India.

Laxmi Institute of Management, Page 41

INDUSTRY PROFILE

BROKERAGE INDUSTRY

The Indian retail brokerage industry consists of companies that primarily act as
agents for the buying and selling of securities (e.g. stocks, shares, and similar financial
instruments) on a commission or transaction fee basis. It has two main interdependent
segments: Primary market and the Secondary market. Now this market is extended to
fields like currency, commodity, mutual fund, insurance etc...
The Indian equity brokerage industry thrived on the back of equity markets'
sustained bull run during 2003-07. Although high competitive pressure meant
continuous compression of brokerage commissions and low electronic penetration
kept operating costs high, industry revenue was growing. Furthermore, the industry
attracted domestic and foreign investment interest at high valuations of upto 45x P/E
multiples. During this time, many of the key players started expanding their portfolio
of services to include wealth management and advisory services, sale of insurance and
mutual fund products, consumer financing and so on.
However, post-2008, the economic downturn - muted trading turnover,
relentless competitive pressure and decreasing margins, continued high operating
costs and high margining requirements - has put the industry under pressure.
Profitability is muted and the major players are under pressure to build scale.
Expansion of scale and investments into technological systems has the potential to
lead the top brokerage firms into paths of higher growth, but the current economic
climate is clearly against heavy investments.
The basic function of a brokerage firm is to execute buy and sell orders for
clients. Traditionally these firms have offered the investigation of the quality and the
possibilities of investing in a variety of investment products. It is still accustomed for
brokerage firms to offer information about possible investments free of charge. This
activity of bringing free of charge stock investment reports is one of the main tools
that are utilized by brokerage houses to compete against other firms and to investors it
continues to be an important service

Laxmi Institute of Management, Page 42

The History of Stock Brokerage Firms

Stock brokerage firms have been an established feature in the financial industry
for nearly one thousand years. Dealing in debt securities, brokers employ a variety of
systems to aid investors with the purchase and sales of stocks and bonds in a variety of
markets. The firms have changed over the years, growing to massive organizations
that can affect the entire financial sector positively or negatively with their
performance. Changing with the times, the early twenty-first century saw a rise of
online trading that enabled the average investor to take part in the stock market for the
first time.

1. History

During the 11th century, the French began regulating and trading agricultural
debts on behalf of the banking community, creating the first brokerage system. In the
1300s, houses began to be set up in major cities like Flanders and Amsterdam in
which commodity traders would hold meetings. Soon, Venetian brokers began to trade
in government securities, expanding the importance of the firms.
In 1602, the Dutch East India Company became the first publicly traded company in
which shareholders could own a portion of the business. The stocks improved the size
of companies and became the standard bearer for the modern financial system.

2. Significance

The earliest brokerage firms were established in London coffee houses,

enabling individuals to purchase stocks from a variety of organizations. They formally
founded the London Stock Exchange in 1801 and created regulations and
memberships. The system was copied by brokerage firms across the world, most
notably on Chestnut Street in Philadelphia. Soon, the US exchange was moved to New
York City and various firms like Morgan Stanley and Merrill Lynch were created to
assist in the brokering of stocks and securities. The firms limited themselves to
researching and trading stocks for investment groups and individuals.

Laxmi Institute of Management, Page 43

3. Considerations

During the 1900s, stock brokerage firms began to move in a direction of market
makers. They adopted the policy of quoting both the buying and selling price of a
security. This allows a firm to make a profit from establishing the immediate sale and
purchase price to an investor. The conflict with brokerage firms setting prices creates
the concern that insider trading can result from the sharing of information. Regulators
have enforced a system called Chinese Walls to prevent communication between
different departments within the brokerage company. This has resulted in increased
profits and greater interconnection within the financial industry.

4. Effects

The creation of high valued brokerage firms like Goldman Sachs and Bear
Sterns created a system of consolidation. Working with hundreds of billions of
dollars, the larger firms began to merge and take over smaller firms in the last half of
the 20th century. Firms like Smith Barney were acquired by Citigroup and other
investment banks, creating massive financial institutions that valued, held, sold,
insured and invested in securities. This conglomeration of the financial sector created
an environment of volatility that caused a chain reaction when other firms like Bear
Sterns and Lehman Brothers filed for bankruptcy. Trillions of dollars of assets were
tied together in different companies and resulted in a large economic collapse in late
2008.

5. Features

A large share of the brokerage firms have moved to an online format. Smaller
brokers such as E*Trade, TD Ameritrade and Charles Schwab have taken control of
most individual investors accounts. The added convenience and personal attention
paid to the small investor has resulted in a large influx of activity. In addition, the fact
that the online resources offer up-to-the-minute pricing and immediate trades makes
their format appealing to the modern user. Discounted commissions have lessened the
price of trades, giving access to a wider swath of people and adding liquidity to the

Laxmi Institute of Management, Page 44

market. The role of the stock brokerage firm is ever-changing and proves to be a boon
for the future of the financial industry.

Full service v/s Discount brokerage houses

Full service brokerage firms continue to offer informative stock reports and a
level of service much higher than other brokerage houses. Discount brokerage houses
only dedicate themselves to execute orders for clients. Full service brokers are sellers
looking for purchasing and selling for clients and offering more customer service than
is available from discount brokers. It is many times possible that a client will not even
know who is taking care of the buy or sell order that they placed.

MARKET SIZE AND CHARACTERISTICS:

The Indian retail brokerage market is showing phenomenal growth. The total
trading volume of brokerage companies has increased from US$1239.1 billion in 2004
to US$1492.1 billion in 2005, and is expected to reach US$6535.7 billion by 2015.
Some of the main characteristics of the brokerage industry include growth in e-
broking; growing derivatives market, decline in brokerage fees etc.
Today, as per NSDL statistics, we have only 2.4 million investors with demat
accounts in the country. Considering various investor combinations that are holding
accounts, we can presume the country has roughly 5-7.5 lakh active investors now.
This figure is unbelievably small compared to the potential number of investors,
which is anything between 200 million and 250 million. When we take into
consideration the way transaction risk and cost in the Indian capital market is coming
down, there will be a massive surge in the number of investors and also in volumes.
The only way to manage this kind of potential growth is to adopt state-of-the-art
trading techniques.
The growth of Internet-based trading as a mass trading technique in the country
is unstoppable, going by the indicators available and the signals for the future. When it

Laxmi Institute of Management, Page 45

ultimately gathers momentum, the biggest beneficiary will be the investor, who will
be able to trade with greater speed and transparency, and at lower costs...

Major players in Indian share broking industry are follows

ICICI Securities Ltd. (www.icicidirect.com)
Kotak Securities Ltd. (www.kotaksecurities.com)
Indiabulls Financial Services Limited (www.indiabulls.com)
IL&FS investmart Limited (www.investsmartindia.com)
SSKI Ltd. (www.sharekhan.com)
Motilal Oswal Securities (www.motilaloswal.com)
Fortis Securities (Religare) (www.fortissecurities.com)
Karvy securities (www.karvy.com)
Geojit BNP paribas (www.geojitbnpparibas.com)
HDFC Securities (www.hdfcsec.com)
Hedge equities (www.hedgeequities.com)
Jrg securities
India infoline (www.indiainfoline.com)

Laxmi Institute of Management, Page 46

 CHAPTER 4
RESEARCH METHODOLOGY

Laxmi Institute of Management, Page 47

4.1 Objectives of the Study

To know the Indian stock exchange market- BSE, NSE

To study the performance of Sensex over the period 2000-10

To know about FII

To study the effect of FII’s investment in BSE Sensex

To study the relationship between FII activity and Sensex
To find the trend in FII’s investment

1.3 Scope of the Study

To get in touch with the industrial and organizational environment.

To familiarize with the trends in the stock market(BSE) over the years

To familiarize with the importance of FII in Indian stock market

1.4 Methodology of the Study

The methodology of the study is through collecting the primary and secondary
data.

Primary data refers to the data collected by the investigator directly through
primary sources. It includes;

Direct observation.

Interview (personal).

Laxmi Institute of Management, Page 48

Secondary data refers to the data collected from;

Books

Journals

Websites

Company manuals etc.

1.5 Limitation of the study

Time

Analysis is conducted only on the basis of some factors therefore cent percent
accuracy is not possible.
Lack of reliability of Secondary data

Laxmi Institute of Management, Page 49

 CHAPTER- V
DATA ANALYSIS AND INTERPRETATION

Laxmi Institute of Management, Page 50

TYPES OF STUDY AND ANALYSIS CONDUCTED

1. THE PERFORMANCE OF SENSEX

By Sensex return
• From 2002-2013
• In 2012 ( monthly basis)

2. INFLUENCE OF FII ON SENSEX

By Sensex return V/S FII’s net inflow

• From 2002-2012
• In 2012 (monthly basis)

Number of FII’s registered and the Sensex returns

3. FII’S INFLOW V/S SENSEX RETURNS

• Coefficient of Correlation method

• Regression method

4 TRENDS IN THE FII’S INVESTMENT

• Trend analysis

Laxmi Institute of Management, Page 51

5.1 SENSEX PERFORMANCE OVER THE YEARS

Indices :SENSEX

Period : ( Year 1991 to Year 2013 )

Year Open High Low Close

1991 1,027.38 1,955.29 947.14 1,908.85
1992 1957.33 4,546.58 1945.48 2,615.37
1993 2,617.78 3,459.07 1980.06 3,346.06
1994 3,436.87 4,643.31 3405.88 3,926.90
1995 3,910.16 3,943.66 2891.45 3,110.49
1996 3,114.08 4,131.22 2,713.12 3,085.20
1997 3,096.65 4,605.41 3,096.65 3,658.98

1998 3,658.34 4,322.00 2,741.22 3,055.41

1999 3,064.95 5,150.99 3,042.25 5,005.82
2000 5,209.54 6,150.69 3,491.55 3,972.12
2001 3,990.65 4,462.11 2,594.87 3,262.33
2002 3,262.01 3,758.27 2,828.48 3,377.28
2003 3,383.85 5,920.76 2,904.44 5,838.96
2004 5,872.48 6,617.15 4,227.50 6,602.69
2005 6,626.49 9,442.98 6,069.33 9,397.93
2006 9,422.49 14,035.30 8,799.01 13,786.91
2007 13,827.77 20,498.11 12,316.10 20,286.99
2008 20,325.27 21,206.77 7,697.39 9,647.31
2009 9,720.55 17,530.94 8,047.17 17,464.81
2010 17,473.45 21,108.64 15,651.99 20,509.09
2011 20,621.61 20,664.80 15,135.86 15,454.92
2012 15,534.67 19,612.18 15,358.02 19,426.71
2013 19,513.45 20,443.62 18,144.22 19,704.33

Laxmi Institute of Management, Page 52

 CHART NO. 5.1

INTERPRETATION

The Bombay stock exchange (BSE SENSEX) which is one of the most important
secondary market in India ,has seen many ups and downs from its years of its starting
in 1991. The market opened at 1027.38 point and closed at 1908.85 with a high value
of 1955.29 and with a low value of 947.14 in the same year.

Since then, the values in the Sensex has increased and decreased. From the table, it
can be found that the Sensex crossed the four digit number in 2006 , and at 13786.91
from the previous year value of 9397.93 (2005)

The changes in the value of Sensex depends upon many factors, like ..

• National and global issues

• Legal and political issues
• GDP growth rate of the nation
• Activities of the foreign investments Etc….

Laxmi Institute of Management, Page 53

From the table it is found that in the year 2008 the Sensex closed at 9647.31 from the
previous year’s 20286.99. The reason for the huge fall in market was due to global
recession which not only caught Indian market but also the overall international
markets too

When the recession began to end in the world, the Sensex and other markets could
see increase in value. And at the end of 2010 the Sensex closed at 20509.09

Laxmi Institute of Management, Page 54

FII’s INVESTMENT

TABLE OF FII’s NET INFLOW

Year Gross Purchase Gross Net

(Cr) Sale Investment
(Cr) (Cr)
2000 74791.5 68421.6 6370.08
2001 51761.2 38651 13128.2
2002 46479.1 42849.8 3629.6
2003 94412 63953.5 30459
2004 185672 146706.8 38965.8
2005 286021.4 238840.9 47181.9
2006 475624.9 439084.1 36540.2
2007 814877.9 743392 71486.3
2008 721607 774594.3 -52987.4
2009 624239.7 540814.7 83424.2
2010 766283.2 633017.1 133266.8
2011 611055.6 613770.8 -2714.2
2012 669184.4 540823.9 128360.7

2013 till
MAY 65796.04 50791.74 15004.46

Source : moneycontrol.com

TABLE NO 5.2

Laxmi Institute of Management, Page 55

 FII’s NET INFLOW

CHART NO. 5.2

Laxmi Institute of Management, Page 56

FII NET INFLOW VS SENSEX RETURN

Year Net INVESTMENT FLOW Return %

2000 6370.08
2001 13128.2 106.0916032
2002 3629.6 -72.35264545
2003 30459 739.1833811
2004 38965.8 27.92869103
2005 47181.9 21.08541336
2006 36540.2 -22.5546237
2007 71486.3 95.63740757
2008 -52987.4 -174.1224542
2009 83424.2 -257.4415805
2010 133266.8 59.74597299
2011 -2714.2 -102.0366663
2012 128360.7 -4829.227765

2013 till
MAY 15004.46 -88.31070569

TABLE NO 5.3

Laxmi Institute of Management, Page 57

 SENSEX RETURN (%) V/S FII NET INFLOW

Laxmi Institute of Management, Page 58

INTERPRETATION

When comparing the Sensex returns and the FII net inflow from the years , it can be
found that the Sensex gain height returns in the year 2009 (81.03%) and the FII net
inflow at that year was 85367 Cr.

And the Sensex loss maximum point (-46.522) when the net inflow was - 53051 Cr in
the year 2008. Recession and many other global and national issues were key factors
for this change.

The negative sign show that in 2008 FII’s were not investing their money. They were
sellers.

*(The Sensex return is not only depend upon FII)*

Laxmi Institute of Management, Page 59

ANALYSIS OF SENSEX RETURN TO FII’s INVESTMENT 2012

TABLE OF SENSEX RETURN 2012

Month Close Return %

Jan-12 17,193.55

Feb-12 17,752.68 3.251975

Mar-12 17,404.20 -1.96297

Apr-12 17,318.81 -0.49063

May-12 16,218.53 -6.35309

Jun-12 17,429.98 7.469543

Jul-12 17,236.18 -1.11188

Aug-12 17,429.56 1.121942

Sep-12 18,762.74 7.64896

Oct-12 18,505.38 -1.37165

Nov-12 19,339.90 4.509607

Dec-12 19,426.71 0.448865

Jan-13 19,894.98 2.410444

Feb-13 18,861.54 -5.19448

Mar-13 18,835.77 -0.13663

TABLE NO 5.4

The Sensex gain maximum return 11.670% during the month of September 2010.
And loss -3.49% in May by making the Sensex to close at 16944.63

Laxmi Institute of Management, Page 60

CHART OF SENSEX RETURN 2012

CHART NO 5.4

Laxmi Institute of Management, Page 61

FII NET INFLOW IN 2012

TABLE OF FII NET INFLOW 2012

Month Gross Purchase(Cr) Gross Sale(Cr) Net Investment(Cr)

Jan 50,467.40 40,109.90 10,357.70

Feb 79,898.60 54,686.60 25,212.10

Mar 63,795.10 55,413.80 8,381.10

Apr 41,091.90 42,200.50 -1,109.10

May 42,443.30 42,790.70 -347.1

Jun 44,751.20 45,252.40 -501.3

Jul 49,557.40 39,284.80 10,272.70

Aug 48,136.50 37,332.50 10,803.90

Sep 66,752.50 47,491.20 19,261.50

Oct 56,832.40 45,468.20 11,364.20

Nov 51,143.80 41,567.00 9,577.20

Dec 74,314.30 49,226.30 25,087.80

Source : moneycontrol.com

TABLE NO 5.5

Laxmi Institute of Management, Page 62

 CHART OF NET INFLOW 2012

CHART 5.5

Laxmi Institute of Management, Page 63

 SENSEX GAIN VS FII NET INFLOW 2012

TABLE NO 5.6

Month Net Investment(Cr) Return %

Feb-12 25,212.10 3.251975

Mar-12 8,381.10 -1.96297

Apr-12 -1,109.10 -0.49063

May-12 -347.1 -6.35309

Jun-12 -501.3 7.469543

Jul-12 10,272.70 -1.11188

Aug-12 10,803.90 1.121942

Sep-12 19,261.50 7.64896

Oct-12 11,364.20 -1.37165

Nov-12 9,577.20 4.509607

Dec-12 25,087.80 0.448865

Laxmi Institute of Management, Page 64

 CHART NO 5.6

INTERPRETATION

From the given table, the Sensex gain maximum return 11.670% during the month of
September 2010 when the FII’s inflow was 29195 Cr.. And the Sensex loss -3.49% in
the month of May, where the FII net inflow was -8629.90.

That means the Sensex was changing according to the inflow and out flow of
investment during the months of 2010.

*(The Sensex return is not only depend upon FII)*

Laxmi Institute of Management, Page 65

5.4 Calculation of correlation between FII investment and sensex movement

Analysis is done for finding the correlation between FII investment and the sensex
fluctuation during the period from 2000-2010. Net yearly FII investment is calculated
by subtracting the gross sell value from the gross purchase value in the particular year
by FII. And the fluctuation in sensex is calculated by subtracting previous years
closing point from the current year.

CALCULATION OF SENSEX FLUCTUATION

Years CLOSE PRICE FLUCTUATION

2000 3972.12 -1033.70

2001 3262.33 -709.79

2002 3377.28 114.95

2003 5838.96 2461.68

2004 6602.69 763.73

2005 9397.93 2795.24

2006 13786.91 4388.98

2007 20286.99 6500.08

2008 9647.31 -10639.68

2009 17464.81 7817.50

2010 20509.09 3044.28

2011 15454.92 -5054.17

2012 19426.71 3971.79

2013 20223.98 797.27

TABLE NO 5.7

Laxmi Institute of Management, Page 66

 Analysis-

TABLE OF CORRELATION

BSE
Years FLUCTUATION(X) (Cr)(Y) n(XY) X^2 Y^2

2002 114.95 3629.6 4589447.72 13213.5025 13173996.16

2003 2461.68 30459 824783422.32 6059868.422 927750681
2004 763.73 38965.8 327352854.77 583283.5129 1518333570
2005 2795.24 47181.9 1450732075.72 7813366.658 2226131688
2006 4388.98 36540.2 1764116276.96 19263145.44 1335186216
2007 6500.08 71486.3 5111333357.94 42251040.01 5110291088
2008 -10639.68 -52987.4 6201458780.35 113202790.5 2807664559
2009 7817.50 83424.2 7173855518.50 61113306.25 6959597146
2010 3044.28 133266.8 4462715992.94 9267640.718 17760039982
2011 -5054.17 -2714.2 150898310.35 25544634.39 7366881.64
2012 3971.79 128360.7 5608039191.18 15775115.8 16476469304
∑ 16164.38 517612.90 33079875228.76 300887405.21 55142005110.91
∑/n 1469.49 47055.72 3007261384.43

TABLE NO 5.8

ΣX= 16164.38Cr

Mean , ΣX/11 =1469.49 Cr

ΣY = 517612.90 Cr
Mean Σy/11 = 47055.72Cr

Laxmi Institute of Management, Page 67

Coefficient of Correlation

Coefficient of Correlation =

r = -53596330224.069 / √32129925359.72

r= -0.17

INTERPRETATION

The Coefficient of Correlation analysis between FII’s net inflow and Sensex return
from 2002-2012 gives a correlation of -0.17 which is a low degree negative
correlation that means the Sensex movement is negatively corelated to the FII
investment during the period 2002 to 2012. Negative values indicate a relationship
between x and y such that as values for x increase, values for y decrease.

Laxmi Institute of Management, Page 68

 CORRELATION BETWEEN FII & BSE FLUCTUATIONS IN THE YEAR 2012

Net
FLUCTUATION
Month Investment(Cr) n(XY) X^2 Y^2
(Y)
(X)
Jan
1,40,96,841.473
Feb 25,212.10 559.13 63,56,49,986.41 312626.3569

Mar 8,381.10 -348.48 -29,20,645.728 7,02,42,837.21 121438.3104

Apr -1,109.10 -85.39 94,706.049 12,30,102.81 7291.4521

3,81,907.188
May -347.1 -1,100.28 1,20,478.41 1210616.078

Jun -501.3 1,211.45 -6,07,299.885 2,51,301.69 1467611.103

Jul 10,272.70 -193.80 -19,90,849.260 10,55,28,365.29 37558.44

Aug 10,803.90 193.38 20,89,258.182 11,67,24,255.21 37395.8244

2,56,79,046.570
Sep 19,261.50 1,333.18 37,10,05,382.25 1777368.912

Oct 11,364.20 -257.36 -29,24,690.512 12,91,45,041.64 66234.1696

Nov 9,577.20 834.52 79,92,364.944 9,17,22,759.84 696423.6304

Dec 25,087.80 86.81 21,77,871.918 62,93,97,708.84 7535.9761

4,40,68,510.94
∑ 1,18,003.00 2,233.16 2,15,10,18,219.60 57,42,100.25

TABLE NO 5.9

∑X = 118003.00

Mean = ∑X/11 = 10727.55

∑Y = 2233.16

Mean = ∑Y/11 = 203.01

Laxmi Institute of Management, Page 69

COEFFICIENT OF CORRELATION

R = 221234040.85/ √ (98673.67*7627.33)

= 5068770244.14 / 752616202.39

= 0.29

INTERPRETATION

It is a low degree positive correlation. It means that the Coefficient of Correlation

analysis between FII’s net inflow and Sensex return gives a correlation of 0.29 which
is a low degree positive correlation that means the Sensex movement is not much
related to the FII investment during the period 2012. Positive values indicate a
relationship between x and y variables such that as values for x increase, values for y
also increase. However the performance of Sensex is less dependent to Net FII Inflow
since it is indirectly proportional to the movement of FII’s Investment.

Laxmi Institute of Management, Page 70

5.5 TREND ANALYSIS

TABLE OF TREND ANALYSIS

Years Net Investment (Cr) % Change

2000 6370.1 100
2001 13128 106.09
2002 3629.6 -72.35
2003 30459 739.18
2004 38966 27.929
2005 47182 21.085
2006 36540 -22.55
2007 71486 95.637
2008 -52987 -174.1
2009 83424 -257.4
2010 133267 59.746
2011 -2714 -102
2012 128361 -4829
2013 till MAY 15004 -88.31

TABLE NO 5.10

Here the base year is 2000, in which FII net inflow was 6370.50 Cr. And it is assigned
as 100 point. The trend analysis is conducted by calculating percentage change in FII
net inflow in each year in relation to the base year

Laxmi Institute of Management, Page 71

INTERPRETATION

From the analysis it is known that the net inflow of money by FII during the period
from 2001-08 is fluctuating in nature. The growing Indian economy and increasing
GDP growth rate has resulted in a positive trend towards FII investment, and from the
year 2010 it shows the negative growth.

Laxmi Institute of Management, Page 72

FUTURE TREND ANALYSIS

TABLE OF TREND ANALYSIS

YEARS NET FII INFLOW

2013 86338

2014 92770

2015 99202

2016 105634

2017 112065

2018 118497

2019 124929

2020 131360

TABLE NO 5.11

Based on calculation in Excel

Laxmi Institute of Management, Page 73

 CHART NO 5.7

INTERPRETATION

From the trend analysis (advanced) of FII net inflow to the Indian economy, it is
found that the trend is increasing in nature. That means the FII’s will increase their
inflow of money in future also.

Laxmi Institute of Management, Page 74

 CHAPTER VI

FINDINGS, CONCLUSION & SUGGESTIONS

Laxmi Institute of Management, Page 75

6.1 FINDINGS

THE PERFORMANCE OF SENSEX

• From the study it is found that the performance of Sensex is fluctuating.

The Sensex saw many ups and downs from its opening year 1991

FII’S INFLOW TO INDIAN MARKET

• The study on the inflow of FII to the Indian equity market has shown that
the inflow is also fluctuating and it is increasing in recent years.

NUMBER OF REGISTERD FII’s V/S SENSEX RETURN

• The study on increasing number of FII registered under by SEBI, shows

that the value of Sensex is not much related to the number of FII registered
in recent years .Today ,there are 1747 FII registered in the country as
against last year number of 1706 an additional of 41. Year 2009 saw 112
FII getting registered. This means despite record inflow, the number of
registered FIIs had declined. This means that the investment that the Indian
market has received is majority through the FII registered earlier

RELATIONSHIP BETWEEN FII’S INVESTMENT AND SENSEX

RETURN

• From the correlation study between sensex movement and FII inflow ,
found that the fluctuations in sensex is not much related to the FII
investment

Laxmi Institute of Management, Page 76

 FINDINGS FROM TREND ANALYSIS

From the trend analysis it is observed that the trend in FII inflow to the Indian
economy is positive in nature. However it is purely based on the assumption
without involving the economic and global crisis.

Laxmi Institute of Management, Page 77

 6.2 CONCLUSION

Foreign Institutional Investors, who invest their money in different countries

in order to get a good portfolio of investment. And India has been in the list of
their portfolio for many years. The increasing GDP growth rate and the overall
development of India in different sectors like industrial and agricultural field and
others are the prime reason for the increasing nature of FII’s inflow.

There is a positive as well as negative correlation between stock indices and

FIIs but FIIs didn’t have any significant impact on Indian Stock Market. Also the
coefficient of determination is less in all the case. It shows the absence of linear
relation between FII and stock index. This does not mean that there is no relation
between them. One of the reasons for absence of any linear relation can also be
due to the sample data. The data was taken on yearly basis.

Also FII is not the only factor affecting the stock indices. There are other major
factors that influence the bourses in the stock market. And from the FII’s analysis
on Sensex return, it can be concluded that FII do have any significant impact on
the Indian Stock Market but there are other factors like government policies,
budgets, bullion market, inflation, economical and political condition, etc. do also
have an impact on the Indian stock market.

Laxmi Institute of Management, Page 78

6.3 SUGGESTIONS & RECOMMENDATIONS

After the analysis of the project study, following recommendations can be made:

• From the analysis there could not find a good positive relationship between
FII's and sensex return (may be because of the data collected is on the yearly
basis & Sensex return is not only dependent upon FII's investment only). They
are needed to be encouraged to enter in Indian market. Because their absence
result in huge change in the market

• Number of FII's get registered is decreasing in nature. It may be because of

nature of procedure. Simplifying procedures and relaxing entry barriers for
business activities and providing investor friendly laws and tax system for
foreign investors helps them to come and invest in India

• Somewhere, a restriction related to the track record of Sub- Accounts is also to

be made on the investors who withdraw money out of the Indian stock market .

• Encourage industries to grow to make FIIs an attractive junction to invest.

Laxmi Institute of Management, Page 79

 BIBLIOGRAPHY

BOOKS

I.M Panday “Financial Management”, Vikas Publishing house Private ltd, New Delhi,
2009

Kothary CR “Reserch Methodology” New Age International Publishers, New Delhi

2006

Prasanna Chandra, ‘Financial Management’, Tata McGraw – Hill publishing

company Ltd, New Delhi. 2001.

Uma Sekaran ,”Reserch Methodology For Business, John Wile And Sons,Inc

WEBSITES

www . bse.india..com

www . nse india. com

www. money control. com

www.hedgeequities.com

www.sebi.com

Laxmi Institute of Management, Page 80