*Associate Professor, Department of Commerce, S. A. Jain College, Ambala City, Haryana, India.
Online published on 29 September, 2017.
The foreign institutional investments (FIIs) have had a very significant impact on the domestic stock market and the real economy since their arrival in India in 1993. Therefore, it is necessary to understand the factors that boost FIIs inflows into the country. The present study examines the causal relation between FIIs, stock market return and other macro economic variables such as Exchange Rate, money supply, interest rate, IIP and WPI for a period of 17 years ranging from January 1993 to December 2009 to find out the possible determinants of FIIs in India. For this purpose we have applied Granger Causality Test and find that stock market return, IIP and exchange rate are main determinant of FIIs flows in the stock market where as the study does not find any causal relation between money supply, wholesale price index (WPI), interest rate and foreign institutional investments.
