IMPACT OF FDI & FII ON INDIAN STOCK MARKETS

Dr.Ch.Chaitanya
Principal
mail2chaitanyapalyam@gmail.com
Vijaya School of Business Management, Hayathnagar-501512.
Ms. Ch.Divya
MBA II Year Student
divyachebrolu2@gmail.com
Vijaya School of Business Management, Hayathnagar-501512.

ABSTRACT
Unprecedented globalizations have witnessed double digit economic growth resulting in fierce
competition and accelerated pace of innovation. As a result inflow of foreign direct investment
has been a striking measure of economic development in both developed and developing
countries FDI and FII thus have become instruments of international economic integration and
stimulation. Fast growing economies across the globe have registered incredible growth at onset
of FDI. Through US captures most of the FDI inflows, developing countries still account for
significant growth of FDI and raise in FII. FDI flows initiate access to foreign capital and attract
advanced and desirable/essential technology to domestic countries for improving the required
skill sets, tools of innovation and other complementary skills. The current paper attempts to
study the relationship between FDI, FII, NIFTY and SENSEX; further analyses the impact of
FDI &FII on Indian stock market by using statistical measures like correlation coefficient and
multiple regression. SENSEX and NIFTY were considered as the representative of stock market
as they are the most popular Indian stock market indices; therefore based on 10 years data
starting from 2008 to 2018 divided into two time lines by considering every five years as a
business cycle breakup, it was found that the flow of FDI &FII were moving in sync with
SENSEX and NIFTY. The study concludes that flow of FDIs and FIIs in India determines the
trend of Indian stock market.
Keywords: FDI flows, FII flows, Sensex, Nifty, Indian Stock Markets, foreign capital
INTRODUTION:

The entry of foreign funds into any select country will be either in the form of FDI or in the form
of FII. These flows are deciding the fate of the country’s stock markets and economy in many
ways. As a result inflow of foreign direct investment has been a striking measure of economic
development in both developed and developing countries FDI and FII thus have become
instruments of international economic integration and stimulation. Fast growing economies
across the globe have registered incredible growth at onset of FDI. Through US captures most of
the FDI inflows, developing countries still account for significant growth of FDI and raise in FII.
FDI flows initiate access to foreign capital and attract advanced and desirable/essential
technology to domestic countries for improving the required skill sets, tools of innovation and
other complementary skills. The current paper attempts to study the relationship between FDI,
FII, NIFTY and SENSEX; further analyses the impact of FDI &FII on Indian stock market by
using statistical measures like correlation coefficient and multiple regression. SENSEX and
NIFTY were considered as the representative of stock market as they are the most popular Indian
stock market indices; therefore based on 10 years data starting from 2008 to 2018 divided into
two time lines by considering every five years as a business cycle breakup, it was found that the
flow of FDI &FII were moving in sync with SENSEX and NIFTY. The study concludes that
flow of FDIs and FIIs in India determines the trend of Indian stock market. Foreign investment is
now seen as measure of growing macroeconomic indicator. Investment would always be a point
of concern for the developing economies such as India and so our country along with its peers
has drafted measures to liberalize their policies for attracting investment from countries with
abundant capital resources. The countries which are developed are focusing on new emerging
markets with high intensity of labor, scope for new products and markets, finally to attain high
yields for their growth ambitions.

NEED & IMPORTANCE OF THE STUDY:

The analysis helps company to assess its position, which is to be standardized and enhanced for
this organization. The flow of FDI and FII will decide the performance of organisation inturn
the stock markets and followed by Indian Economy. The financial strengths and weaknesses of
firm are communicated in a more easy and understandable manner by the use of financial
efficiency and also helps in effective control of the business.

SCOPE OF THE STUDY:

To study the impact of FDI & FII on Indian stock market, SENSEX and NIFTY as they are the
popular stock market indices and widely used by market participants for benchmarking. The
present study takes 10 years data into consideration.

OBJECTIVES OF THE STUDY:

 Analyze the trends of foreign institutional inflows.
 To study the patterns of FDI and FII flows into India.
 To analyse the correlation existing among the FII, FDI, NIFTY and SENSEX.
 To study the impact of foreign direct investment (FDI) on Indian stocks market
(SENSEX &NIFTY).
 To study the impact of foreign institutional investment on Indian stocks market
(SENSEX & NIFTY).

METHODOLOGY OF THE STUDY:

This study is empirical in nature and hence secondary data is used to conduct the research. The
data was collected from the internet by exploring the secondary source available on websites
from below
  Bulletins of reserve bank of India.
 Publications from ministry of commerce, government of India.
 The SENSEX & NIFTY data is downloaded from the websites of bseindia.com &
nseindia.com respectively.
 Daily closing index value are taken and averaged to get the index value for each
month.
 FDI & FII from various reports of dipp.com.

In order to analyze the collected data the statistical tools such as Descriptive Statistics,
Correlation and Regression Analysis is used.
DATE NSE % BSE % FDI % FII's EQUITY % FII's DEBT % FII's TOTAL %
01-Feb-08 -1.23172841 -0.396572894 223.6925287 -113.2951303 27.79199509 -138.1697919
MAR -0.600594849 -11.00353154 -20.40481158 -107.5183198 -135.2371035 -123.8799972
APR 19.89656254 10.5013027 -16.32277493 -924.8656946 93.41895885 -37.93683794
MAY 17.80251316 -5.042658459 10.3832056 -566.2727949 -90.43309632 725.3788483
JUNE 12.08720243 -17.99492799 -38.15130109 101.4506635 513.4520885 114.4135439
JULY -2.102439607 6.642226778 -6.023037876 -81.80611547 -462.3510564 -116.0621575
AUG 5.249985149 1.454330146 3.822582321 -34.0429007 -65.24262186 -97.40740741
SEP 6.304770614 -11.70034323 16.8184092 583.3182006 154.7384322 -11083.33333
OCT 2.774057541 -23.89010321 -37.61562179 85.38606494 -157.9975656 239.0674576
NOV -0.812357282 -7.103961357 -27.16913784 -83.07095849 -326.8255933 -109.3982668
DEC 2.951526767 6.099275024 24.90103676 -167.3569147 -85.13677018 46.96969697
01-Jan-09 12.87537431 -2.312250772 101.4186538 -91.9880348 -93.18274491 -91.6468319
FEB -9.637871472 -5.651702418 -45.08466956 -42.60947401 -185.7071651 -9.254095504
MAR -8.306482435 9.187200068 36.75808432 -121.7616155 833.4690317 88.53466487
APR 2.776141803 17.45635268 16.81133393 1127.461335 -138.7841879 -252.7656107
MAY 2.585892627 28.25510271 -13.15339939 209.1133989 -208.8912092 93.4342424
JUNE -11.2331051 -0.898514555 21.31195909 -80.96196768 -139.3951687 -71.85905686
JULY -7.598568749 8.117034547 38.18402919 188.9474921 98.03407602 169.1206794
AUG 7.09192931 -0.023420085 -7.327662071 -55.69923372 -117.9209606 -65.68450439
SEP -4.764011285 9.320441396 -53.62116992 274.1825599 -687.7868636 354.8039086
OCT -23.68760112 -7.184979833 48.71689872 -50.5181446 209.4466634 -22.36032393
NOV -11.69504424 6.479125934 -25.82836163 -39.4410109 -90.07454245 -61.29973392
DEC 2.152261229 3.181986291 -11.08773667 86.15790431 -322.4284044 40.91953279
01-Jan-10 78.05882869 -6.337601153 30.63326374 -100.5997082 95.32345722 -90.43872291
FEB -6.141141269 0.437646259 -15.24611123 -343.1940835 -64.7021205 -48.14031167
MAR 6.995968446 6.684419232 -30.89880578 1537.872935 202.266298 574.7386999
APR 2.251905508 0.176519888 76.40531199 -53.02388599 -68.11748128 -57.89961783
MAY -4.566481357 -3.497295644 4.516860885 -200.8043669 -19.16949767 -156.3691672
JUNE 2.667816617 4.463183911 -36.56635422 -211.3556646 -69.78414331 -261.0191812
JULY 3.314908607 0.94565813 30.02022087 58.13499805 994.7332883 119.7905554
AUG 1.819004449 0.575488757 -25.87630099 -29.66907981 -63.00746315 -40.60015046
SEP 6.491267837 11.6742863 57.42414461 113.7262452 156.4192344 122.4439769
OCT 4.897613914 -0.183266631 -36.59011688 14.35079909 -155.402822 -25.60678832
NOV -0.668885897 -2.551324508 18.48019402 -35.9556069 -168.4780057 -12.72451209
DEC -1.387389063 5.06033169 24.08569869 -88.79462089 -60.08638124 -84.84604178
01-Jan-11 -3.158598099 -10.63591802 -48.0369515 -103.6115738 -78.07106949 -97.01464709
FEB -6.602302381 -2.75189112 22.43386243 -4.724703927 -87.07059193 -160.9593766
MAR 2.5458635 9.0993862 -16.45635264 -250.418702 -101.1475908 -310.4899382
APR 5.4289149 -1.590416565 186.5094144 4.578404083 14.56953642 4.554964694
MAY -5.940921657 -3.306236008 51.26742255 -191.6960102 -13616.76301 -159.4210753
JUNE -0.356177982 1.85150957 21.12575193 -169.1249395 -86.68747862 -214.207203
JULY 2.264941429 -3.441974289 -80.74179181 75.63098727 742.5313203 118.1427255
AUG -9.288605843 -8.355406326 162.259517 -234.9119574 11.75461339 -174.1809819
SEP -1.204788188 -1.337131036 -34.39207117 -98.53697259 -158.2579919 -76.38721923
OCT 0.885979465 7.604644774 -32.02093494 -1158.233438 -182.0742563 -264.9946409
NOV -1.101538019 -8.932782303 125.8792651 -350.2712693 -33.29290046 -205.9828505
DEC -4.434485854 -4.146380492 -44.81369587 -102.3345562 2229.061932 -770.3125958
01-Jan-12 2.878325447 11.24968618 44.41325098 -481.5974653 -62.03437374 -33.09590907
FEB 9.940496128 3.251975305 5.695956454 143.4131129 -37.28820988 33.79961791
MAR -2.04481715 -1.962971225 -24.6551407 -66.75789307 -165.7817227 -94.91167462
APR -0.830501706 -0.490628699 17.41730746 -113.2323112 -42.51043485 -373.1771269
MAY -5.480523287 -6.353092389 -24.85446985 -68.68349865 -194.2313277 -165.7973737
JUNE 2.168667033 7.469542554 -3.568958362 44.34206738 -52.88019724 -63.36012912
JULY 2.912707269 -1.111877352 17.37196959 -2149.212049 101.6589369 1057.492588
AUG 2.062615341 1.121942333 53.72769494 5.17098718 -92.19224532 -91.44699287
SEP 2.918426687 7.648959584 103.1483543 78.28099112 135.0830816 1601.360486
OCT 3.707496356 -1.371654673 -59.70961177 -41.00086702 1161.269076 -3.36102757
NOV -0.158350928 4.509607476 -43.68139874 -15.72421683 -96.27964439 -48.63937967
DEC 3.72088077 0.448864782 3.690927906 161.9550803 483.4303321 171.4698253
INTERPRETATION:

During the study period on 2008-2012 based on NIFTY 2008,2010 &2011 has experienced
positive returns, in the year of 2009 & 2011 has experienced negative returns. Based on BSE
2009,2010 & 2011 has experienced positive returns, in the year of 2008 &2011 has experienced
negative returns. Based on FDI has experienced in all positive returns and it shown abnormal
returns. Based on FII’s Equity in the year of 2008,2011 &2012 the return percentage was
experiencsd in negative returns, and in the year of 2009 &2010 has experienced positive returns.
Based on FII’s Debt in the year of 2008,2009 &2011 has experienced negative returns, and in
the year of 2010 &2012 has experienced positive returns. Based on FII’ Total in the year of
2009,2010 &2012 has experienced postive returns, in the year 2008 and 2011 has experienced
negative returns.
DATE NSE % BSE % FDI % FII's EQUITY % FII's DEBT % FII's TOTAL %
01-Jan-13 1.7278353 2.410444177 94.92681304 -82.81471302 -91.57711215 -84.69156934
FEB -1.654551732 -5.194476194 -17.62095742 10.78924702 35.76518493 13.73270415
MAR -1.888951179 -0.136627232 -14.0563497 -62.66623021 44.8387903 -47.54219409
APR -1.426794813 3.548620524 52.13932747 -40.66199036 -7.955133736 -27.95763791
MAY 6.39960279 1.313154411 -28.90754971 309.4754341 11.9047619 161.7975437
JUNE -4.657316768 -1.844557016 -6.039670158 -149.7406288 -655.1181102 -256.9478996
JULY 2.199295824 -0.258354768 17.44544592 -44.80819806 -63.66983552 -58.96019202
AUG -6.748833988 -3.752668552 -10.13834192 -2.694709169 -18.81541784 -13.40211874
SEP 5.20896887 4.081962564 196.1119227 -320.4998311 -41.90115625 -147.0149729
OCT 4.940064425 9.209345622 -71.32556639 20.27875632 139.1334977 -71.16140398
NOV 0.735731871 -1.760446256 35.74642668 -48.32548071 -55.93607306 0.234962406
DEC 1.929206096 1.821620215 -33.51857268 98.20108428 -188.417182 902.156587
01-Jan-14 -0.379486107 -3.102545596 99.28141956 -99.36890115 -124.7969478 -78.6099605
FEB -1.999272717 2.955417925 -7.594377806 96.63865546 -10.08803236 -4.368385499
MAR 6.71016742 5.994994347 71.68113403 1329.985755 2.19634824 148.5126756
APR 3.791575298 0.140845259 -52.26829947 -52.1741296 -179.2767133 -98.67984714
MAY 4.862084913 8.027281892 107.7065112 45.8654447 -315.2640174 7980.861244
JUNE 6.489846265 4.940426983 -46.15636551 -0.107096958 -15.46125835 -9.097637516
JULY 1.775431359 1.8934216 82.67292318 -6.296905153 37.21208495 17.39456115
AUG 1.440607569 2.869823753 -62.97688136 -58.5812357 -27.16808371 -38.59512845
SEP 3.418003524 -0.028530553 109.3922652 -6.022099448 -4.998802682 -5.249841872
OCT -1.246795658 4.638739551 -0.055224888 -122.9668822 12.81744281 -20.21743277
NOV -31.88758516 2.971955258 -41.7608055 -1273.464164 -34.5193543 52.25914415
DEC 53.401865 -4.163136601 42.96858528 -92.46709809 -4.563678239 -52.01365992
01-Jan-15 2.501856829 6.122056392 105.5743991 -86.68885363 -86.95053909 -86.85156491
FEB 2.731536861 0.611829853 -26.84002869 -11.16959517 -36.98300351 -27.08382807
MAR -0.987070928 -4.781806107 -35.18164436 5.24573022 -33.94712714 -15.63670412
APR -1.616493511 -3.384352458 71.09144543 -2.955787382 -58.21862348 -26.00974762
MAY -2.61852171 3.02514021 8.594164456 -149.2108182 -335.4374308 -193.0802844
JUNE -1.267322868 -0.17108397 -46.60885849 -42.02496533 -120.425682 -88.73318386
JULY 3.683778395 1.201296002 -2.638200534 -259.0610048 -99.7697179 -431.0323383
AUG -2.207598339 -6.514311446 13.13336988 -417.2964843 -16275 -429.2128499
SEP -5.957142328 -0.487994372 32.77723937 -61.63417669 -206.9551777 -66.99383702
OCT 4.5737432 1.919339564 77.80616235 -202.7027027 2168.930636 -486.4107884
NOV -3.483538279 -1.917557339 -43.11977716 -206.3759398 -123.8965671 -148.4384787
DEC -1.077610443 -0.107589517 59.10613949 -60.17811705 46.26865672 -23.29576944
01-Jan-16 -3.418766394 -4.773994794 8.410821319 -162.4775382 -94.95605905 -113.8447764
FEB -4.458905623 -7.513623466 -36.43943696 -50.37749416 -454.3017726 55.61606535
MAR 4.864367633 10.17241979 -22.27760015 -482.9559862 -81.98901769 -243.3872849
APR 3.131377817 1.044753621 35.1784634 -60.19486355 -534.8238482 -24.57415976
MAY 1.095997093 4.144787559 -40.60863728 -69.78374525 -168.6974135 -112.5792099
JUNE 4.056742901 1.244039664 13.86481802 46.0086512 41.07507371 34.35155413
JULY 3.838449516 3.896855227 81.52339355 239.6714247 -210.0482315 -876.1069007
AUG 1.584953371 1.427035498 17.20743711 -28.07643514 -138.34916 -66.87053503
SEP 1.653877362 -2.060334941 6.892690513 15.12512402 -472.9142857 213.8845796
OCT -1.327265016 0.230568048 20.33114124 -141.2333621 -161.2932884 -150.9365887
NOV -4.799920893 -4.573542412 -23.50978164 323.6878774 252.5333333 282.2627596
DEC -1.65709784 -0.098863872 -28.14960008 -55.18526639 -10.48127837 -31.18336887
01-Jan-17 3.354413289 3.866454647 19.09622915 -105.7224815 -94.68692006 -84.85202998
FEB 5.093293093 3.931738403 -70.00775853 -941.2914189 -357.0073307 -553.7185355
MAR 2.651866676 3.051769942 98.64498645 212.1187639 325.4194631 254.6904552
APR 1.851596602 1.005722388 29.14547935 -92.25393128 -19.68448038 -59.5492437
MAY 2.413720355 4.102492112 25.60741381 222.0969089 -5.936947555 18.05079532
JUNE 1.801094121 -0.719808128 -23.15837761 -53.09298405 34.09031584 9.067222512
JULY 2.06271394 5.152804139 54.77836924 42.68730993 -26.54467588 -17.99877141
AUG 0.979733137 -2.412583262 64.56029828 -347.4326681 -18.12688822 -88.85883136
SEP 0.774998301 -1.408014815 -73.37395992 -10.79091621 -91.26691267 -475.1587598
OCT 1.611187986 6.167457067 28.03697183 -126.8170646 1090.808006 -290.371403
NOV 1.83524877 -0.192032488 14.69577174 545.7610475 -96.69447211 5.957424551
DEC -0.024116807 2.737549907 54.63309856 -129.8205596 342.5612053 -117.4943232
01-Jan-18 4.348756958 5.602958349 -50.29719602 -73.11129322 -94.27248535 -88.866672
FEB -2.209977579 -4.951978339 33.09502145 -182.8894855 -102.9801713 -152.4155891
MAR -2.852813651 -3.555343371 5.327668718 -202.0222358 3460.629921 -122.8028097
APR 2.348469893 6.647763878 62.75209792 -147.6402952 10.96859797 -684.5604808
MAY 1.8287146 0.460803018 -13.17513674 81.19596542 95.83499402 91.3501703
JUNE 0.736278008 0.286220804 -35.7032711 -51.97813121 -44.18438995 -46.95392262
JULY 2.310254985 6.162861469 -2.918814104 -146.8640033 -100.3919781 -114.3336499
AUG 4.615345423 2.761458234 -8.325886991 -21.59893993 7839.534884 127.2968198
SEP -1.751368012 -6.256761859 91.91560117 -709.8591549 -398.7111892 -508.7640886
OCT -8.083961668 -4.927493586 3.355043021 167.1685912 -2.157285742 84.95840266
NOV 2.291837004 5.087531085 -63.88206388 -120.6804744 -156.2236921 -129.8026011
DEC 1.474798504 -0.348038227 148.547419 -47.45025915 -15.34759358 -31.96205261
INTERPRETATION:
During the study period on 2013-2018 based on NIFTY all most all the years has experienced
positive returns except in the year 2015. Based on BSE has also experienced all positive returns
except 2015. Based on FDI has experienced in all positive returns and it is shown abnormal
returns. Based on FII’s Equity the returns percentage was declined all most all the years,it is
shown highly volatile movements. Based on FII’s Debt in the year of 2013,2014,2015 &2016
has experienced negative returns, and the year of 2017 &2018 has experienced positive returns.
Based on FII’s Total in the year of 2015,2016,2017 &2018 has experienced negative returns, and
the year of 2013 &2014 has experienced positive returns.

TABLE 3: DESCRIPTIVE STATISTICS OF SELECTED VARIABLES ON (2008-2012)

Descriptive Statistics NSE% BSE % FDI % FII's Equity% FII's Debt FII's Total %
Mean 1.821111 0.498427 12.532650 -73.410229 -183.122943 -181.186552
Standard Deviation 12.307906 8.258782 58.929655 454.413206 1,829.094080 1,480.746729
Skewnes 4.091477 0.160932 1.577350 -0.903039 -7.009390 -7.072756
Kurtosis 25.623529 2.199935 3.102207 10.121458 52.543545 53.080342
INTERPRETATION:
The Mean Return of FDI’s is high compared to NSE (NIFTY) & BSE (SENSEX). The mean of
debt and equity are showing negative balance indicating the downward movement of FII’s
during the years 2008-2012.
It gives an indication that during the years 2008-2012. The flow of FDI is more than FII’s as
there is lot of volatility existed in the markets during the period. The mean return of FDI’s
(12.53%) is followed by NSE(NIFTY) 1.82% ,BSE(SENSEX) 0.498%, FII’s Equity (-
73.41%),Total FII’s(-181.18%) and Debt(-183.12%).
The Standard Deviation of FII’s Debt (1,829) is high when compared with Total FII’s (1’480),
FII’s Equity (454.413), FDI’s (58.92), NSE (NIFTY) 12.30 and BSE (SENSEX) 8.25.
During the years 2008-2012 NSE- NIFTY (4.0914), BSE –SENSEX (0.1609), FDI’s (1.5773)
are positively skewed and FII’s-Equity (-0.9030),FII’s Debt (-7.0093) and FII’s Total(-7.0727)
are negatively skewed.
During the years 2008-2012 BSE (SENSEX) 2.1999 & FDI (3.1022) are showing Meso Kurtic
(+3,-3) movements (i.e) their returns are moving rationally /following Normal Distribution.
NSE(NIFTY) 25.623, FII’s Equity (10.121), FII’s Debt (52.543) and Total of FII’s (53.080) are
showing Lepto Kurtic (+5,-5) movements. Their returns are moving abnormally.

TABLE4: DESCRIPTIVE STATISTICS OF SELECTED VARIABLES ON (2013-2018)

Descriptive statistics NSE % BSE % FDI % FII's EQUITY % FII's DEBT % FII TOTAL %
Mean 1.131142 0.937296 16.071124 -65.452194 -99.675824 30.961109
Standard Deviation 8.014813 3.892763 56.022025 298.870803 2,207.143190 977.709572
Skewness 2.954832 -0.033466 0.686268 0.153996 -4.949379 7.766574
Kurtosis 29.098670 -0.395370 0.355674 10.220878 43.769149 63.899558
INTERPRETATION:
The Mean return of FII’s Total is high compared to FDI’s. FII’s Equity, FII’s Debt are showing
negative balance indicating the downward movement of NSE (NIFTY), BSE (SENSEX) during
the years 2013-2018.
It gives an indication that during the years 2013-2018. The flow of FII’s is more than FDI’s as
there is lot of volatility existed in the markets during the period. The mean return of FII’s Total
(30.96%) is followed by FDI (16.07%),NSE (NIFTY) 1.13%, BSE (SENSEX) 0.93%, FII’s
Equity (-65.45%),FII’s Debt (-99.67%).
The Standard Deviation of FII’s Debt (2027.143) is high when compared with the FII’s Total
(977.709), FII’s Equity (298.870), FDI (56.022), NSE (NIFTY)8.014 and BSE (SENSEX) 3.892.
During the year 2013 to 2018 NSE (NIFTY),FDI, FII’s Equity and FII’s Total are positively
Skewed.
BSE (SENSEX) and FII’s Debt are negatively skewed.
During the years 2013 to 2018 BSE (SENSEX), FDI are showing platy kurtic(+1,-1) movement
means their returns are moving flat.
NSE (NIFTY), FII’s Equity, FII’s Debt and FII’s Total are showing lepto Kurtic (+5,-5)
movements their returns are moving abnormally.

TABLE 5: CORRELATION MATRIX OF NSE, BSE, FDI & FII ON (2008-2012)

Correlation NSE % BSE % FII % FII EQUITY % FII DEBT % FII TOTAL %
NSE % 1.000
BSE % -0.036 1.000
FII % 0.008 0.001 1.000
FII EQUITY % -0.023 0.095 -0.060 1.000
FII DEBT % 0.086 0.030 -0.101 0.040 1.000
FII TOTAL % -0.023 0.209 0.009 -0.205 -0.015 1.000

INTERPRETATION:
By using Correlation matrix, During the years 2008 to 2012 we could say that NSE (NIFTY) is
showing low positive correlation with FII’s Debt (0.086) followed by FDI (0.08). Correlation is
negative and low with BSE (-0.036) followed by FII’s Equity (-0.023), FII’s Total (-0.023).
BSE (SENSEX) is showing low positive correlation with FII’s Total (.209) followed by FII’s
Equity (0.095), FII’s Debt (0.030) and FDI’s (.001).
FDI’s is showing low positive correlation with FII’s Total (.009). Correlation is negative and low
with FII’s Equity (-0.060) and FII’s Debt (-0.101).
FII’s Equity is showing low negative correlation with FII’s Total (-.0205) and low positive
correlation with (0.040).
FII’s Debt is showing low and negative correlation with FII’s Total (-0.015).
 TABLE 6: CORRELATION MATRIX OF NSE, BSE, FDI & FII ON (2013-2018)
Correlation NSE % BSE % FII % FII EQUITY % FII DEBT % FII TOTAL %
NSE % 1.000
BSE % 0.116 1.000
FII % 0.151 0.040 1.000
FII EQUITY % 0.265 0.060 0.102 1.000
FII DEBT % 0.065 0.219 0.002 0.128 1.000
FII TOTAL % .043 0.191 0.162 0.129 0.032 1.000

INTERPRETATION:
By using Correlation matrix , during the years 2013 to 2018 we could say that, NSE(NIFTY) is
showing low positive correlation with FII’s Equity (.0265) is followed by FDI’s (0.151),BSE
(SENSEX) 0.116,FII’s Debt (0.065) and FII’s Total (0.043).
FII’s Debt (0.219) is followed by FII’s Total (0.191), FII’s Equity (0.060) and FDI’s (0.040)
where compared with BSE (SENSEX).
FDI’s is showing low positive correlation with FII’s Total (0.162) is followed by FII’s Equity
(0.102) and FII’s Debt (0.002).
FII’s Equity is showing low correlation with FII’s Total (0.129) is followed by FII’s Debt
(0.128).
FII’s Debt is showing low correlation with FII’s Total (0.032).
TABLE5: REGRESSION ANALYSIS OF SELECTED VARIBLES ON NSE (2008-2012)

Regression Analysis

r² 0.000 n 59
r 0.008 k 1
Std. Error 12.415 Dep. Var. % CHANGE OF NSE

ANOVA table
Source SS df MS F p-value
Regression 0.5858 1 0.5858 0.00 .9511
Residual 8,785.5178 57 154.1319
Total 8,786.1036 58

Regression output confidence interval

variables coefficients std. error t (df=57) p-value 95% lower 95% upper
Intercept 1.7997 1.6531 1.089 .2809 -1.5105 5.1099
FDI % 0.0017 0.0277 0.062 .9511 -0.0537 0.0571
Regression Analysis

R² 0.009
Adjusted R² 0.000 n 59
R 0.094 k 3
Std. Error 12.583 Dep. Var. % CHANGE OF NSE

ANOVA table
Source SS df MS F p-value
Regression 77.7692 3 25.9231 0.16 .9203
Residual 8,708.3344 55 158.3334
Total 8,786.1036 58

Regression output confidence interval

variables coefficients std. error t (df=55) p-value 95% lower 95% upper
Intercept 1.8208 1.6877 1.079 .2854 -1.5614 5.2030
FII's EQUITY% -0.0009 0.0037 -0.235 .8152 -0.0083 0.0066
FII'SDEBT% 0.0006 0.0009 0.646 .5212 -0.0012 0.0024
FII's TOTAL -0.00023793 0.0011 -0.209 .8355 -0.00252281 0.00204694

INTERPRETATION:
 The R & R2 values of NSE (NIFTY) and other FII’s & FDI’s are indicating that there is
No impact on NSE Stock Markets by flow of FDI’s (0.000) and R2 value FII’s is (0.009)
parallel the p values of FDI is (0.9511), FII’s equity is( 0.8152), FII’s Debt is (0.5212)
and FII’s Total is( 0.8355) are showing No impact of NSE (NIFTY) as their p value >
0.05. All FDI’s & FII’s are performing independently during the year 2008 to 2012.

TABLE6: REGRESSION ANALYSIS OF SELECTD VARIABLES ON BSE (2008-2012):

 Regression Analysis

r² 0.000 n 59
r 0.001 k 1
Std. Error 8.331 Dep. Var. %CHANGE OF BSE

ANOVA table
Source SS df MS F p-value
Regression 0.0015 1 0.0015 0.00 .9963
Residual 3,956.0320 57 69.4041
Total 3,956.0335 58

Regression output confidence interval

variables coefficients std. error t (df=57) p-value 95% lower 95% upper
Intercept 0.4973 1.1093 0.448 .6556 -1.7239 2.7186
FDI % 0.00008605 0.0186 0.005 .9963 -0.03708541 0.03725750

Regression Analysis

R² 0.064
Adjusted R² 0.013 n 59
R 0.253 k 3
Std. Error 8.205 Dep. Var. %CHANGE OF BSE

ANOVA table
Source SS df MS F p-value
Regression 253.5080 3 84.5027 1.26 .2987
Residual 3,702.5254 55 67.3186
Total 3,956.0335 58

Regression output confidence interval

variables coefficients std. error t (df=55) p-value 95% lower 95% upper
Intercept 0.9525 1.1005 0.866 .3905 -1.2528 3.1579
FII's EQUITY 0.0026 0.0024 1.068 .2903 -0.0023 0.0074
FII's DEBT 0.00012669 0.0006 0.215 .8306 -0.00105469 0.00130807
FII's TOTAL 0.0013 0.0007 1.788 .0792 -0.0002 0.0028

TABLE7: REGRESSION ANALYSIS OF SELECTED VARIABLES ON NSE (2013-2018)

Regression output
r² 0.023 n 72
r 0.151 k 1
Dep.
Std. Error 7.98 Var. %CHANGE OF NSE
ANOVA table
Source SS df MS F p-value
103.723
Regression 103.7231 1 1 1.63 0.2061
Residual 4,457.12 70 63.6731    
Total 4,560.84 71      

coefficient std. t 95% 95%

Variables s error (df=70) p-value lower upper
Intercept 0.7844 0.9789 0.801 0.4256 -1.1679 2.7367
FDI % 0.0216 0.0169 1.276 0.2061 -0.0121 0.0553

Regression output
R² 0.072
Adjusted R² 0.031 n 72
 R 0.267 k 3
Std. Error 7.891 Dep. Var. %CHANGE OF NSE
ANOVA table
Source SS df MS F p-value
Regression 326.1529 3 108.7176 1.75 0.1659
Residual 4,234.69 68 62.2749    
Total 4,560.84 71      
std. t 95% 95%
Variables coefficients error (df=68) p-value lower upper
Intercept 1.5974 0.9542 1.674 0.0987 -0.3067 3.5014
FII ‘sEQUITY % 0.007 0.0032 2.192 0.0318 0.0006 0.0133
0.00042 - 0.00096
FII ‘s DEBT % 0.00011356 8 0.265 0.7915 0.00074 7
- 0.00199
FII’s TOTAL % 0.00006839 0.001 0.071 0.9438 0.00186 6

INTERPRETATION:
 The R & R2 values of NSE (NIFTY) and other FDI’s & FII’s are indicating that there is
No impact of FDI’s & FII’s on NSE (NIFTY) in the year 2013 to 2018 as R2 values
FDI’s (0.023), FII’s (0.072) parallel. The p values of FDI’s (0.2061), FII’s Equity
(0.0318) FII’s Debt (0.7915) and in Total FII’s (0.9438) are showing No impact of NSE
(NIFTY) as their p values are >0.05. All values are performing independently during the
year 2013 to 2018.

TABLE 8:

REGRESSION ANALYSIS OF SELECTED VARIABLES ON BSE (2013-2018):

r 2 0.002 n 72
r 0.040 k 1
Dep. %CHANGE OF
Std. Error 3.917 Var. BSE

ANOVA table
Source SS df MS F p-value
Regression 1.7377 1 1.7377 0.11 .7375
Residual 1,074.1682 70 15.3453    
Total 1,075.9059 71      

Regression confidence interval

 output
t 95%
variables coefficients std. error (df=70) p-value 95% lower upper
Intercept 0.8924 0.4805 1.857 .0675 -0.0660 1.8508
FDI % 0.0028 0.0083 0.337 .7375 -0.0138 0.0193
Regression Analysis

R² 0.082
Adjusted
R² 0.041 n 72
R 0.286 k 3
Dep. %CHANGE OF
Std. Error 3.812 Var. BSE

ANOVA table
Source SS df MS F p-value
Regression 87.8840 3 29.2947 2.02 .1198
Residual 988.0219 68 14.5297    
1,075.905
Total 9 71      

confidence interval
Coefficie t
variables nt std. error (df=68) p-value 95% lower 95% upper
Intercept 0.9597 0.4609 2.082 .0411 0.0399 1.8794
-
FII EQUITY 0.0001173 0.0029527 0.0031875
% 8 0.0015 0.076 .9394 8 4
-
0.0003733 0.0002067 0.0000391 0.0007857
FII DEBT % 1 0 1.806 .0753 4 7
0.0004666
FII TOTAL % 0.0007 6 1.560 .1234 -0.0002 1.17
INTERPRETATION:

 The R & R2 values of BSE (SENSEX) and other FDI’s & FII’s are indicating tha there is
No impact of FDI’s & FII’s on BSE (SENSEX) in the year 2013 to 2018 as R2 values are
in FDI’s (0.002) and in FII’s (0.082) parallel. The p value of FDI’s (0.7375), FII’s Equity
 (0.9394),FII’s Debt (0.0753) and in Total FII’s (0.1234) are showing No impact of BSE
(SENSEX) as their p values are >0.05. All values are performing independently during
the year 2013 to 2018.

FINDINGS:

 The Mean return of FDI’s is high where the FDI’s risk is low during the years
2008-2012.
 I observed that risk of FII’s Debt is high then return also low during the years
2008-2012.
 The mean return of FII’s Total is high where the risk of FII’s Total is moderate
during the year 2013-2018.
 The flow of FII’s did not show one single trend during the considered period of
study.
 I observed that positive skewness in NSE (NIFTY), FDI’s and BSE (SENSEX)
during the years 2008-2012.
 FII’s Equity, FII’s Debt and FII’s Total are showing negative skewness during the
years 2008-2012.
 I observed that positive skewness in NSE(NIFTY), FDI’s, FII’s Equity, FII’s
Total and BSE(SENSEX), FII’s Total are showing negative balance during the
years 2013-2018.
 NSE (NIFTY), FII’s Equity, FII’s Debt, FII’s Total of lepto kurtosis and BSE
(SENSEX), FDI’s meso kurtosis during the years 2008-2012.
 In the period of the study 2013-2018 BSE (SENSEX), FDI’s are in plato kurtosis
and NSE (NIFTY), FII’s Equity. FII’s Debt & FII’s Total are in lepto kurtosis.
 There is a low negative correlation between NSE (NIFTY), FII’s Equity & FII’s
Total and low positive correlation BSE (SENSEX) and FDI’s and correlation is
not significant during the years 2008-2012.
 There is low positive correlation between FDI’s, NIFTY, BSE (SENSEX) & FII’s
and correlation is not significant during the years 2013-2018.
 Flow of FDI’s into India and BSE (SENSEX) trend are Independent.
 Flow of FII’s into India and BSE (SENSEX) trend are Independent.
 Flow of FDI’s into India and NSE (NIFTY) trend are Independent.
 Flow of FII’s into India and NSE (NIFTY) trend are Independent.

CONCLUSION AND SUGGESTIONS:

The role of investment in promoting economic growth has conventional considerable
concentration in India since independence. The implementation of the liberal and innovative
economic policies in early 1990s made India to emerge as a crucial destination of global
investors’ investment. FIIs have been investing on financial instruments in India from September
1992, and promulgating incentives for financial innovations in the country. Recently, FIIs have
become the movers and shakers of the market. Given this growing importance of FIIs for the
Indian economy, it is necessary that the energetic of such cross- border portfolio investment in
the context of economic growth of the country be examined. It is with this aim an attempt has
been made in this empirical research study. This empirical research study examined the vital role
of FIIs investments on Indian stock market. Here researcher has used FIIs investments and
performance of Indian stock market; BSE SENSEX and NIFTY50 variables of the study. To
study the trend of Foreign Institutional investors in India, to discover the relationship between
the FIIs equity investment pattern and Indian stock indices, to study the trend of FIIs investments
in India stock market and BSE & NSE Indices, to discover the role of foreign institutional
investors in Indian stock market. Researcher employed Descriptive statistical tools like as Mean,
Median, and Coefficient of variance, Skewness, kurtosis, Standard Deviation, standard error,
range, etc for fundamental analysis of the research objectives. Coefficient of correlation and
coefficient of determination employed in the variables for purpose of measure the effect of
independent variables FIIs investments on dependent variables Indian stock indexes BSE
SENSEX and NIFTY and study the association with independent and dependent variables.
Regression residual model employed for examine cause and effect relationship between FIIs
investment and Indian stock indexes BSE SENSEX and NIFTY.

So far as the findings of the study reveals, both the FDI and FII, individually, significantly
influence the economic growth of India, and they do positively impact the economic growth of
India on day to basis. Interestingly the results are highly reliable as the regression and correlation
models are insignificant at 5% level of significance with normally distributed error term and no
auto-correlation and. So, from the viewpoint of policymaking, the study is of high insignificance.
The Indian policies are be so designed in such a way that they should create ease of business and
congenial environment so as to attract more and more foreign funds, i.e. both FDI and FII. As a
corollary Indian economic growth soar faster and it now steps forward to be a developed
economy.

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