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Introduction
FII is when a foreign co. buys equity in a company through the
stock markets
"

Attracted towards Indian equity.

Agencies Regulating FII in India:

 RBI
 FIPB: - Reviews all foreign Investment proposals.
 SEBI: - which regulates India’s capital

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Financial instruments available for FII
investments
Securities

Units of mutual funds

Dated Government Securities

Derivatives

Commercial papers
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P- NOTES/OFF-SHORE DERIVATIVES

Used to trade in Indian

markets

Through brokerage houses

The brokerage houses then

repatriate the dividends and
capital gains back to these
entities.

They keep the investor’s

name anonymous
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Investment limits
 no more than 10% of the equity in any one company

 no more than 10% in the equity in any one company on behalf

of a fund sub-account

 no more than 5% in the equity in any one company on behalf

of a corporate/individual sub-account

 no more than 24% in the aggregate of the total issued capital of

a company to be held by FIIs
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Areas affected by FII
 Stock Market

 Exchange Rates

 Exports & Imports

 Inflation

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ADVANTAGES
 Enhanced flows of equity capital

 Improving capital markets

 Trading & delivery volume raises

 Volatility will be curtailed

 More liquidity will be created

 Standard will be improved

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DISADVANTAGES
 Problems of inflation

 Hot money

 False representation of economy

 Cannot be utilized for long term

 Problem for small investor

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 FDI V/S FII
 Brings capital into a country  Buys equity in a company
for production or some other through the stock markets
facility.

 Direct production activity &  Short term investments mostly

also of medium to long term in the financial markets
nature.
 No degree of control in a
 A degree of control in the company.
company.
 Short term capital
 Long term capital

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Influence of FIIs on Indian Stock Market

"FIIs Fuel the Market Run".

Increase depth and breadth of the market.

Major role in expanding securities business.

Efficient pricing of shares.

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TRENDS IN FIIS

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 YEARWISE TRENDS IN FIIS
GROSS PURCHASES

40000
& GROSS SALES

35000
30000
25000
20000
15000
10000
5000
0

YEAR

GROSS PURCHASES RS.CRORES

GROSS SALES RS. CRORES
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NET INVESTMENTS 1993-2000
12000
10803.6

10000

8000
6791.5
6317.36668.1
5637
6000
3853.5
4000
2595.2
2000
739.8
1993 1994 1995 1996 1997 1998 1999 2000
0
1 2 3 4 5 6 7 8

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2008(10/08/08) 560480.9 589650

2007 814877 743390.7

2006 475622.5 439082.8

2005 286020.5 238839.4

2004185671.5 146706.4

200394410.5 63951.8

0 500000 1000000 1500000 2000000

gross purchases RS.CRORES GROSS SALES RS.CRORES

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% CHANGE IN
INVETSMENTS
100000

50000

-50000
2008(10
2003 2004 2005 2006 2007
/08/08)
NET IVESTMENTS 30458.7 38965.1 47181.2 36539.7 71486.5 -29169
% CHANGE 0 27.9277 54.9022 19.9647 134.7 -195.77

NET IVESTMENTS % CHANGE

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Page 16
NET INVESTMENTS JAN –JUL 09

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FII holding is estimated at close to $100 billion

Gross purchases Rs 2,846.60 crore and gross sales

Rs 2,586.60 crore.

 Total of 1675 foreign funds registered with the Securities &

Exchange Board of India (Sebi).

FII inflows of US$ 7 billion since March 2009 have helped the
rupee climb about 10.5 per cent to 47.24/25 per dollar from its
low of 52.2 recorded therein

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BUDGET IMPACT ON FIIs
 No permission to invest in commodity derivatives.

 Public float of listed company

 Zero coupon bonds

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Conclusion
There is a direct relation between the FII's money flow and the
movement of sensex.

The present condition FII inflow in July 2009 totaled Rs 5,668

crore (till 17 July 2009). FIIs had bought stocks worth a net Rs
3,224.90 crore in June 2009. FII inflow in calendar year 2009
totaled Rs 30,212.20 crore (till 17 July 2009).

In the January-March 2009 quarter, FII interest in major

cement manufacturers has also increased

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