Role of Fiis
CHAPTER-II
ROLE OF FIIs IN INDIA A major development in our country post 1991 has been liberalization of the financial sector, especially that of capital markets. Our country today has one of the most prominent and followed stock exchanges in the world. Further, India has also been consistently gaining prominence in various international forums, though we still have a long way to go. Developing countries like India are generally capital scarce. This is because levels of income are lower in comparison to other developed countries, which in turn means savings and investments are also lower. The most of FIIs portfolio is concentrated is top large cap stocks which was their bearish phase strategy, ,now with the recovery in the equity market and valuations turning attractive they are likely to widen their exposure in Indian stock market .FIIs are the major source of liquidity for the Indian market . If FIIs are investing huge amount in the Indian stock markets then it reflects their high confidence and a healthy investors sentiments for the market . The entry of FIIs in India has brought mixed consequences for the market. They have improved the breadth and depth of the Indian market. There are two type of investments in India one is FIIs And other one is FDI. The FIIs are invested in stock market while the FDI is invested in anywhere of the country. Foreign Direct Investment (FDI) of Portfolio Investment (better known as Institutional Investment ). The difference between the two is subtle. Let’s look into FDI first. FDI is defined as “investment made to acquire lasting interest in enterprises operating outside of the economy of the investor.” Examples of FDI would include POSCO setting up a steel plant in Orissa (in-bound FDI), Tata buying Arcelor (out-bound FDI) and so on. On the other hand, FII is used to denote an investor, who invests money in the financial markets of a country different from the one in which that investor is incorporated. So, if
ROLE OF FIIs IN INDIA A major development in our country post 1991 has been liberalization of the financial sector, especially that of capital markets. Our country today has one of the most prominent and followed stock exchanges in the world. Further, India has also been consistently gaining prominence in various international forums, though we still have a long way to go. Developing countries like India are generally capital scarce. This is because levels of income are lower in comparison to other developed countries, which in turn means savings and investments are also lower. The most of FIIs portfolio is concentrated is top large cap stocks which was their bearish phase strategy, ,now with the recovery in the equity market and valuations turning attractive they are likely to widen their exposure in Indian stock market .FIIs are the major source of liquidity for the Indian market . If FIIs are investing huge amount in the Indian stock markets then it reflects their high confidence and a healthy investors sentiments for the market . The entry of FIIs in India has brought mixed consequences for the market. They have improved the breadth and depth of the Indian market. There are two type of investments in India one is FIIs And other one is FDI. The FIIs are invested in stock market while the FDI is invested in anywhere of the country. Foreign Direct Investment (FDI) of Portfolio Investment (better known as Institutional Investment ). The difference between the two is subtle. Let’s look into FDI first. FDI is defined as “investment made to acquire lasting interest in enterprises operating outside of the economy of the investor.” Examples of FDI would include POSCO setting up a steel plant in Orissa (in-bound FDI), Tata buying Arcelor (out-bound FDI) and so on. On the other hand, FII is used to denote an investor, who invests money in the financial markets of a country different from the one in which that investor is incorporated. So, if