Impact of Foreign Institutional Investors on Indian Capital Market

The foreign institutional investors (FII) have become a significant driving force of the Indian capital market and their growing presence marks the development of the capital market of India. To facilitate foreign capital flows developing countries seek to strengthen their capital markets. As a result of which Indian capital markets have achieved new heights and have become more volatile opening the dimensions of new research in the arena of Foreign Institutional Investments and Indian capital market. This paper makes an attempt to study the effects of trading behaviour of foreign institutional investors on the Indian capital market. We found out that there are no significant changes in the Indian capital market returns and volatility is significantly reduced after opening up of the market to foreign investors.