FII and its Effects on the Indian Markets

Foreign Institutional Investors play a big role in the Indian Securities markets , with the sheer volume of money at play their arrival or departure can make the markets either move or crumble onto their own. While we haven't done any co-relation analysis, we might put up that data pretty soon. We do not believe any mathematical analysis of such sort plays any significant role, and can be relied upon while trading , we so believe a rough estimate about the flow of money especially FII and DII ( Domestic Institutional Investors) do impact the markets from a price view as well as a know how of and about the same gives an extra sense about the pulse of the market. While it is hard to say what is happening or what could happen in the market by just looking at one parameter, mixed all together they give a clear view about the market and expectations.

Attached together is the data set for FII obtained from RBI , and a graph showing the Y-O-Y change as well as total change in terms of money invested by the FII in the Indian Equity Markets. By the end of June '11 FII had a net investment of 3.62 lac crores or $67.33 billion assuming an exchange rate of  $1= 50 INR. FII has increased approximately at an annual compounded rate of 28 % since 93/94 till April 2010 last year. A substantial increase over a 17 year time span.