Impact of Fii's on Indian Stock Market (specific to Sensex)

In the changing global scenario the impact of foreign institutional investors on Indian stock market is very high and its effects need to be studied. They have emerged as very significant players in the Indian stock market and their growing contribution and participation adds as an important aspect for the development of stock markets in India. Indian Stock Markets have reached new heights and became more volatile making the researches work in this dimension of establishing the link between FIIs and Stock Market. This paper makes an attempt to develop an understanding of the dynamics FIIs and effect on the Indian equity market. The study is conducted using data from BSE Sensex and FII activity over a period spanning from Jan.2003 to Dec 2012. It provides the evidence of significant positive correlation between FII activity and effects on Indian Stock Market.