FIIs Importance for Indian Stock Market.

Guided By ::Ms.Rajinder Kaur Presented By:By:Preeti Setia / Priyanka Sharma

STOCK MARKET

STOCK MARKET
A place where people can buy and sell portions of businesses called stocks. A public market for the trading of company stock at an agreed price. The stocks are listed and traded on stock exchanges. Though 24 other exchanges exist in India, NSE and BSE are the two most significant stock exchanges.

BSE: BOMBAY STOCK EXCHANGE

The oldest stock exchange in Asia with a rich heritage, started in 1875. A Capital Raising Platform . Online Trading Having the maximum no. of Listed Companies i.e. over 4900.

NSE: NATIONAL STOCK EXCHANGE.

Mumbai based Stock Exchange. Largest stock exchange in India in terms of daily turnover. The NSE's key index is the S&P CNX Nifty, known as the Nifty 50. Consists of 50 companies representing 23 sectors of the economy.

SECURITY EXCHANGE BOARD OF INDIA i.e. SEBI

Objectives of SEBI
To protect the interest of the investors in securities. To promote the development of securities market . To regulate the securities market .

SEBI regulates:
Primary market secondary market mutual funds FIIs

FII
FINANCIAL INSTITUTIONAL INVESTORS

OUT BOUND FII

INWARD FII

The term Foreign Institutional Investors refers to outside investors investing in the financial markets of India. Institutional Investor is any investor that is registered in a country or outside of the one in which it is currently investing.

How FII started in India?

India opened its stock market to foreign investors in September 1992. In order to trade in Indian equity market foreign corporation need to register with SEBI as FII and shall comply with the Exchange Control Regulations of RBI.

NO. OF FIIs

WHO CAN BE REGISTERED AS AN FII?

1. Pension Funds 2. Mutual Funds 3. Insurance Companies 4. Investment Trusts 5. Banks 6. University Funds 7. Foundations 8. Charitable Trusts / Charitable Societies

Where FII can invest?

Securities in Primary markets secondary markets Shares (unlisted / listed or to be listed on a recognized stock exchange in India)

FIIs Investments Appreciation of the rupee Higher foreign reserves Creating wealth Direct effect on Inflation

Why there is need of FII ?

FII flows helps in increasing domestic savings and investment without increasing the foreign debt of our country. Capital inflows to the equity market increase stock prices and encourage the investment by Indian firms.

Impact Of FIIs On Indian Markets

In the past four years there has been more than $41 trillion worth of FII funds invested in India. The present downfall of the market too is influenced as these FIIs are taking out some of their invested money. For long-term value investors, theres little longbecause for worry, but short term traders are adversely getting affected by the role of FIIs are playing at the present.

Why FII called good friend for good time volatile in nature
As FIIs purchase and sell these stocks there is a high degree of volatility in the stock market If our market is in good position we will get more inflows of foreign currency, & if the market position is down, then FIIs will drawback their money. This shows that it is a good friend only for good time.

Howcan be attributed they perform The degree of volatility

to the following reasons: Increase in investment by FIIs increases stock prices encourages further investment Little correction takes place stock prices decline FII will pull out their investment because of Risk Factor

How They Perform

FIIs manipulate the situation of boom they wait till the index rises up to a certain height Then exit at an appropriate time. This tendency increases the volatility further.

Foreign Fund Flows from 20062008

FIIs as major cause of market crash ( Jan 21 to Jan 29 2008)

The Indian capital markets have been left reeling under the impact of Instability. It began with two mega issues of reliance power and future capital holdings, which drew out huge amounts of money from the market FIIs bowed out from the capital market with more than Rs 10000 crore

Total Drawback during Jan. 21 to 29

in 2008
Date 21 Jan. 22 Jan 23 Jan 24 Jan 25 Jan 28 Jan 29 Jan Total Investment - 2425.7 - 2256.2 - 2499. - 1351.2 - 669.1 - 1513.4 - 285.1 - 9662