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Role of foreign institutional investors in Indian stock market with special reference to sensex tumbling?
Foreign Institutional Investors (FIIs) play a significant role in the Indian stock market, including the movement of the Sensex. Here's an overview of their role and their impact on market dynamics: Investment Inflows: FIIs are institutional investors from overseas who invest in Indian financial markets, including stocks. Their investment inflows can have a considerable impact on market liquidity and overall demand for Indian equities. Market Participation: FIIs are active participants in the stock market, buying and selling shares based on their investment strategies and market outlook. Their trading activities can influence stock prices and contribute to the overall market sentiment. Liquidity and Volume: FIIs often bring liquidity to the market due to the large capital they invest. Their participation can increase trading volumes, enhance market efficiency, and improve price discovery. Market Sentiment and Confidence: FIIs' investment decisions and actions can influence market sentiment and investor confidence. Positive or negative outlooks from FIIs may lead to increased or decreased investor participation, impacting market trends. Foreign Capital Flows: The entry or exit of FIIs' capital in the Indian stock market can affect the overall foreign capital inflows into the country. Changes in foreign investment trends can impact currency exchange rates and the balance of payments. Sensex Movement: The Sensex, a widely followed stock market index in India, represents the overall performance of the Indian stock market. FIIs' buying or selling activities, along with other domestic and international factors, can contribute to the movement of the Sensex.
What is the difference between FDI and FII?
Portfolio investors: buy stocks or bonds in foreign country's and foreign direct investment: Investment that establishes a lasting interest in another country. SK(APEX) FII is investing into financial markets of India. Majorly secondary market. FDI is acquisition of physical assets or capital in INdia. It leads to change in management, transfer of technology, increase in production etc. 1. FDI is an investment that a parent company makes in a foreign country. On the contrary, FII is an investment made by an investor in the markets of a foreign nation. 2. FII can enter the stock market easily and also withdraw from it easily. But FDI cannot enter and exit that easily. 3. Foreign Direct Investment targets a specific enterprise while FII targets the capitak markets of foreign country. 4. The Foreign Direct Investment is considered to be more stable than Foreign Institutional Investor 5. FDI flows into the primary market, the FII flows into secondary market. 6. FIIs are short-term investments, the FDI's are long term. FDI means foreign direct investment. FDI outflow means withdrawal of investments from a country is more than new investment, i.e.. more money is taken out than invested at a particular time. Portfolio investors: buy stocks or bonds in foreign country's and foreign investment: is an investment in an enterprise or buisness that operates outside the investors country.
What are the sources of foreign capital?
All About Foreign Capital - FDI/FIIIt's difficult for any developing nation to grow without foreign capital post globalization. Attracting foreign capital to one's country is one of the most important tasks of finance ministry and central banks. Foreign capital not only increases the growth rate of economy but also brings new ideas and technology which empowers the local industries. So, what are the sources of foreign capital and how are they classified? If there are different classifications, then which one is the most important with respect to growth perspective? What are the rules and regulations which govern the foreign capital and how will it affect common investors like us? Let's try to find answers to these crucial questions from India's perspective through this article.What is Foreign Capital and how is it classified?Any capital which is invested in India from foreign sources (Like Foreign Investors, Companies, NRI's, PIO's, etc) is considered as foreign capital.Classification of foreign capital:Classification of foreign capital is primarily based on the source of capital. Broadly, it's classified into four categories:1. Foreign Direct Investment (FDI)2. Foreign Institutional Investment (FII)3. Non Resident Indian i.e. NRI investment4. Person of Indian Origin i.e. PIO InvestmentCategory three and four are self explanatory, so we will focus on category one and two as a lot of confusion prevails in investors minds regarding FDI and FII.What are FDI and FII?Foreign Direct Investment (FDI):FDI stands for Foreign Direct Investment and it's a part of country's financial accounts. FDI basically comprises of investment by foreign individuals or entities into Indian companies. FDI's have ownership and controlling interest in the company and are treated as promoter group shareholders. A foreign company buying a majority stake in an Indian company is an example of foreign direct investment. FDI does not include foreign investment into the stock markets.Foreign Institutional Investment (FII):Foreign institutional Investment is the investment by foreign companies into Indian financial market. Its mandatory for FII's to register with the Securities and Exchange Board of India (SEBI) to participate in the financial market. Normally the FII's do not have ownership interest in Indian companies and their share holding can be compared to public share holding in a company. According to SEBI, foreign pension funds, mutual funds, charitable/endowment/university funds etc are treated as FII.To remove the ambiguity related to FDI and FII, Finance Minister Mr P Chidambaram has proposed that India will follow global practices to define foreign institutional investors (FIIs) and foreign direct investment (FDI) based on their share holdings in domestic firms. According to international practice, when an investor has a stake of 10% or less in a company, it is treated as FII and, when an investor has a stake of more than 10%, it is treated as FDI.Which is more reliable - FDI or FII?FDI is of long term in nature as the foreign investors have ownership interest. Exit route is relatively tough as FDI is a planned investment and most of the investment goes to physical assets. As a lot of future planning is involved, FDI is not speculative in nature. Compared to FDI, FII is short term in nature as most of the investment is done through secondary market. Entry and exit, both are relatively easy and hence the investments have speculative element in them.Using FDI/FII data as common investorsAs we can see that FDI is long term in nature and FII is short term in nature, investors and traders can map their style of investing with FDI and FII data. If you are a trader (short term time horizon) you should be more concerned about the FII data. Historically, it has been observed that stock index follows the FII cycle. When there is increase in FII flow stock market rises and when there is fall in FII activity stock market falls. Simply following the FII activity can be hugely beneficial for traders.If you follow long term investing style, you should be more concerned about FDI data. Track the sectors and companies which are attracting heavy FDI inflow. Tracking the government policies can provide a great insight into FDI inflow data. Planning your investment in accordance with the FDI data can create great fortune for you in long run.
Highest stake holder in ICICI bank?
FIIS's
What are the reasons for appreciation of currency?
Huge inflow of funds(FIIs)
What is the total number of registered FIIs in India till 2008?
Please visit : http://www.sebi.gov.in/FIIIndex.jsp?fiiIndxName=% to find out the list of FIIs registered with SEBI. The total number should be around 1540.
What is Debt market?
Wholesale Debt Market is the market where the investors are mostly Banks, Financial Institutions, the RBI, Primary Dealers, Insurance companies, MFs, Corporates and FIIs.
Role of foreign institutional investors in Indian stock market with special reference to sensex tumbling?
Foreign Institutional Investors (FIIs) play a significant role in the Indian stock market, including the movement of the Sensex. Here's an overview of their role and their impact on market dynamics: Investment Inflows: FIIs are institutional investors from overseas who invest in Indian financial markets, including stocks. Their investment inflows can have a considerable impact on market liquidity and overall demand for Indian equities. Market Participation: FIIs are active participants in the stock market, buying and selling shares based on their investment strategies and market outlook. Their trading activities can influence stock prices and contribute to the overall market sentiment. Liquidity and Volume: FIIs often bring liquidity to the market due to the large capital they invest. Their participation can increase trading volumes, enhance market efficiency, and improve price discovery. Market Sentiment and Confidence: FIIs' investment decisions and actions can influence market sentiment and investor confidence. Positive or negative outlooks from FIIs may lead to increased or decreased investor participation, impacting market trends. Foreign Capital Flows: The entry or exit of FIIs' capital in the Indian stock market can affect the overall foreign capital inflows into the country. Changes in foreign investment trends can impact currency exchange rates and the balance of payments. Sensex Movement: The Sensex, a widely followed stock market index in India, represents the overall performance of the Indian stock market. FIIs' buying or selling activities, along with other domestic and international factors, can contribute to the movement of the Sensex.
What is wholesale debt market?
Wholesale Debt Market is the market where the investors are mostly Banks, Financial Institutions, the RBI, Primary Dealers, Insurance companies, MFs, Corporates and FIIs.
Objective of stock exchange?
Stock Exchange in any country serve one basic objective That is Funding to companies listed on that stock exchange. Companies float their IPOs on exchange and in return give buyers right of ownership and annual dividends(sometimes twice a year). Companies sell their right of ownership to traders/investors/FIIs etc and in return generates capital for their companies. Stock Exchanges also attract lots of FIIs which is good for country economy.
How fiis contributes in Indian stock market?
FII stands for Foreign Institutional Investors. They are companies from abroad that are investing in the stock market. They bring in foreign investments and exchange and infuse a lot of money into our stock markets.
Want to know about instanex fii index in India how to get it online?
Instanex FII index. It will track the 15 stocks in which there is a concentration of FII funds. These stocks account for 55 per cent of the market cap of the FII holdings in India. The index is for those investors who want to replicate what the FIIs do in the market.The top 15 stocks account for 55 per cent of the market cap of the entire FII holding in India and the top 100 stocks they own account for 90 per cent of their holdings in India. FII index will give the value of the portfolios owned by the FIIs.
What is the roll of SEBI in stock exchange?
SEBI is the regulatory body of the Stock Markets in India. It registers and regulates the functioning of various intermediaries viz, Stock exchanges, Depositories, Merchant Bankers, Brokers, FIIs etac. As Stock exchanges is one of the intermediary. hence SEBI gives registration to the stock exchanges and regulate their functioning..
What effect in India for libaralization?
Liberlisation means being liberal. Doctrine of liberal economy is/to be adopted by India. Because of Liberalisation, India experiencing flow of foreign investment in India. It gave avenues to Foreign Institutional Investor (FII) to invest their capital in Indian industries for better return on their investment (ROI). These FIIs enter in security market, speculate, bring about higher volatility in market. Sharpe rise/decline in certain scripts. Results into merger and acquision of weaker or smaller companies into a bigger companies. As there is no restriction on repatriation, these FIIs are free to take back not only their capital but also huge profit, at the cost of inocent Indian individuals. The above is about urban salaried class person. On rural front, on behest of IMF and IBRD (World Bank), subsidies offered to farmers is keep on reducing year after year.
What is the relationship between stock market and fdi and fii?
fdi or foregin direct investment is bought in by the investors under the rules as laid down in fera and fema... these investment are bought in by the investors with a long term horizon say anything between 5-10 years and even more(hero Honda is classic example) . They bring in much need working capital, cash to run industry.Along with this they also bring in expertise and knowledge to run industry. This all helps our industry to grow in terms of sales,profits, goodwill. this in turn increases earnings per share and this is sought by the investors. Hence they purchase the shares there by liifting our sensex or nifty. it also helps in macro environment that is we have higher GDP, higher standard of living, and this in turn leads to better consumption in economy. This all factors make our nation a favourable destination for profitable investments. This is were fiis (foregin institutional investors ) comes. fii are short term investors say with investment horizon of 1-2 years. They either have entry through pn(participatory notes) or through brokers, or can directly invest by registrating themselves. fiis see the domestic condition as well as external factors before investing in companies. they then either make equity infusion with a lock in period of 1-2years and after words exit. Thus industry instead of borrowing get money in form of equity infusion there by saving interest outgo. if company performs well in all parameters fiis may also become fdis and would exit much after stipulated time......hence fiis and fdis are investors who bring in necessay cash with a hope to earn decent profits and on the basis of profits the future earnings are discounted and speculators play in these shares thereby caousing movements in the market.
