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Abstract
Indian capital market (Stock Market) is huge and allure Domestic as well as foreign investors as their investment destination. The major part of investment in Indian capital market (Stock Market) is credited to foreign institutional investors (FII’s). One distinguished concern in the matter is whether these FII’s regulate the Indian capital market (Stock Market). This paper examines whether market movement can be explained by investment of these investors and their impact on the stock markets. FII’s, because of their short-term nature, can have bidirectional causation with the returns of other domestic financial markets such as money markets and foreign exchange markets. Hence, the understanding of determinants of FII’s is very important for any emerging economy as FII’s exerts a larger impact on the domestic financial markets in the short run and a real impact in the long run. The present paper is an attempt to find out determinants of FII’s in India that opened its economy to foreign capital due to their foreign exchange crisis. The objective of the study is to find out whether there exist relationship between FII’s and Stock market.