DETERMINANTS OF FOREIGN INSTITUTIONAL INVESTORS' INVESTMENT AND ITS EFFECT ON SENSEX MOVEMENT- A QUARTERLY APPRAISAL

Abstract

Indian capital market is vast destination and attracts investors for Investments. The Indian market is steadily growing and had allured domestic investors' community and foreign investors group in the past. India is a favourite investment place for Foreign Institutional Investors. Foreign institutional Investors are the investors who invest their fund in the recipient country and who are registered outside country. In this research study, it is an attempt made to describe or moreover explain the impact and extent of foreign institutional investors in Sensex movement. In General meaning of foreign institutional investors are referred as an entities which are companies or firms, registered outside India investing in the financial or capital market of India. Foreign Institutional Investors must register themselves with the Securities and Exchange Board of India (SEBI) to make participation in the capital market. One of the major market regulations pertaining to Foreign Institutional Investors involves placing l mits on Foreign Institutional Investors ownership in Indian Companies. They can make investment in a portfolio of shares and deposits. Foreign Institutional Investors invest their major source of money in the issue of Participatory Notes (P-Notes), or which is sometimes called Offshore Derivatives.

There are nearly 1484 Foreign Institutional Investors and more than 38 Foreign Brokers registered to Securities and Exchange Board of India (SEBI). In this present paper we probe into relationship between capital market movement with reference to Sensex and these investors, we often hear that whenever there is a rise in stock market, it is due to Foreign Institutional Investors' investment and there is a decline in stock market, it is due to withdrawal of money by Foreign Institutional Investors.