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The impact of foreign institutional investors on the Mumbai (Bombay) Stock Exchange: A case study

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case study
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47 pages
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  1. Abstract.
  2. Introduction.
    1. Background.
    2. Overview of the Indian economy.
    3. Indian growth.
    4. Development of Indian stock markets.
    5. National stock exchange India.
    6. Case study.
  3. Literature review.
    1. Foreign institutional investors in India.
    2. Annual report 2006-2007.
    3. Importance of foreign institutional investors in India.
    4. Benefits of foreign institutional investors in India.
    5. Costs of foreign institutional investors.
    6. Factors wich attract foreign institutional investors.
    7. Impacts of foreign institutional investors.
  4. Research methodology.
    1. Introduction.
    2. Research defined.
    3. Research philosophy.
    4. Research strategies.
    5. Case study.
    6. Interviews.
  5. Research analysis.
    1. Introduction.
    2. Sampling.
    3. Responses from key individuals of the Bombay Stock Exchange.
  6. Conclusion and recommendations.
    1. Limitations and further research.
  7. Bibliography.
  8. Graphs included.

To aid foreign private capital flows in form of Foreign Institutional Investors developing countries were advised by World Bank to develop their stock markets. It was suggested that these investments would help the stock markets directly through widening investor foundation and indirectly gripping the local authorities to improve the trading system. While the volatility associated with the foreign institutional investor's investment strategies is well known, there was also concern that foreign institutional investors might introduce distortion in the host country markets due to pressure on them to secure capital gains. Foreign flows such as foreign institutional investors have also known to influence the economic behavior of the country positively. Countries with well developed financial markets gain significantly from foreign institutional investors Given the huge volume of foreign institutional investor's capital flow and their influence on the domestic financial markets, it becomes important to asses the impact of foreign institutional investors impact on the Indian economy and Indian stock exchange.

In this context, the papers seeks to assess and examines the impact of foreign Institutional Investors on the Indian stock market and the Indian economic growth and relatively finds their advantages, disadvantages and study the relationship between foreign institutional investors and trends in the Indian stock market. The study also examine the trends and changing patterns of financial market after globalization, and also ascertain the impact of domestic financial policy variables on the foreign institutional investors.

Tags: Foreign institutional investors and Indian capital market, Role of foreign institutional investors, Impact of foreign institutional investors, Indian foreign institutional investors, Duties of foreign institutional investors

[...] The research methodology for this dissertation is case study methodology and the research is largely dependent on interview because foreign institutional investment impact is particularly studies in Bombay stock exchange and this would help in better analysing of facts. Secondly articles, journals and magazines information in theory of literature review would be important in setting the kind of questions to be asked for the interview. As there are not many studies done on this topic and not much theory available because foreign institutional investor's power is changed during many intervals, thus there is no fixed theory. [...]


[...] The government which tried to modernise the equity market in the past resulted in pressure from foreign institutional investors , this shows the level of impact they hold on decision of the government as well) for example foreign institutional investors came in India only when paperless trading took place because foreign institutional investors ( Foreign institutional investors were scared of fake shares and frauds, therefore SEBI( Security Exchange Board of India) introduced Demat system through which share transfer process faster ,simpler and gave a sense of security to foreign institutional investors . [...]


[...] Questions were asked relating to gain knowledge about the importance of foreign institutional investors, their impact on the stock market, whether they are good for Indian economy, the idea behind these questions was to understand the roe of foreign institutional investors and their importance in stock market SUMMARY: This chapter throws light on the research methodology adopted by the researcher. After analysing various methodologies, the researcher has decided on taking interview research methodology and questionnaire based quantitative analysis, because it was most suitable to gain inside knowledge about the happenings of foreign institutional investors. [...]

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