Global Transformation Imprinting Indian Financial Markets

The Economic reforms of 1991, namely Globalization and Liberalization were an endeavour to encourage growth and unleash Indian economy’s potential. Introduction of liberal economic policies under financial sector reforms move, fascinated Foreign Institutional Investors (FIIs) towards Indian financial markets and their growing contribution acted as a facilitator to our stock markets’ development.  In the present study an attempt has been made to study the impact of foreign institutional investments on Indian capital markets by analysing twenty years data starting from Jan 1996 to 2016 (till July). This research is based on secondary data collected from official website of BSE, NSE and SEBI. In order to scrutinize the collected data statistical tools such as correlation and regression have been used. The aftermath of all the discussions and data analysis concludes that FIIs have major impact on Indian capital markets. The correlation coefficient between both FIIs and BSE Sensex, as well as between FIIs and NSE Nifty is positively correlated. Volatility or plummeting in stock market occurs as an effect of withdrawal of money by FIIs, along with other factors like speculative trading, interest rate prevailing in the market and government policies related to specific sectors etc.