CONTENTS

Preface i-ii

List of Tables vii-viii

List of Figures ix-xi

Chapters Pages

I Introduction 1-14

1.1 Problem Identification 1

1.2 Literature Review 7

1.3 Objectives of the Study 12

1.4 Methodology 13

1.5 Plan of Work 14

II Conceptual Overview of Institutional Flows into Equity Markets 15-44

2.1 Introduction 15

2.2 Motivation of the FIIs 17

2.2.1 International Diversification 17

2.2.2 Participation in Growth of Foreign Markets 31

2.2.3 Abnormal Returns arising out of Market Segmentation 37

2.3 Risks of International Portfolio Investment 39

2.4 Benefits of FPI for the Host Country 41

2.4.1 Development Effect 41

2.4.2 Resource Effect 42

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2.4.3 Welfare Effect 42

2.5 Summary 44

III International Trend in FII Flows 45-66

3.1 Introduction 45

3.2 FPI Assets (Equity) Across Countries 46

3.3 FPI Liabilities (Equity) Across Countries 49

3.4 Evidences of Diversification Benefit From FPI 54

3.5 Cross Investments and FPI Concentration 55

3.6 Summary 63

Annexure A Distributions of Returns on S&P Global Equity Indices of Top 64

IV Regulatory Framework for Foreign Institutional Investments 67-85

4.1 Introduction 67

4.2 SEBI (FIIs) Regulations (1995) and Periodic Modifications 69

4.3 SEBI (Foreign Portfolio Investors) Regulations, 2014 76

4.4 Summary 85

V Determinants and Impact of FII Flows in Indian Stock Market 86-204

5.1 Introduction 86

Part A: FII and Stock Efficiency

5.2 Conceptual and Research Issues 87

5.3 Survey of Empirical Literature 95

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5.4 Empirical Objective 100

5.5 Research Methodology 100

5.5.1 Sample Selection 100

5.5.2 Period of Study 101

5.5.3 Data Type and Source 101

5.5.4 Statistical Tools Used for Analysis 101

5.5.5 Statistical Software Package Used 102

5.5.6 Hypotheses 102

5.5.7 Variables Used 103

5.5.8 Steps in research 108

5.6 Analysis of Findings 110

Part B: FII and Stock Liquidity

5.7 Conceptual and Research Issues 127

5.8 Survey of Empirical Literature 137

5.9 Empirical Objective 143

5.10 Research Methodology 143

5.10.1 Sample, Study Period, Data Source and Statistical Technique 143

5.10.2 Hypothesis 143

5.10.3 Variables Used 144

5.10.4 Steps in Research 147

5.11 Analysis of Findings 150

Part C: FII and Stock Volatility

5.12 Conceptual and Research Issues 160

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5.13 Survey of Empirical Literature 164

5.14 Empirical Objective 169

5.15 Research Methodology 170

5.15.1 Sample, Study Period, Data Source and Statistical Technique 170

5.15.2 Hypotheses 170

5.15.3 Variables Used 171

5.15.4 Steps in Research 174

5.16 Analysis of Findings 178

5.17 Summary of Findings 192

Annexure B List of the sample companies 194

Annexure C Estimates of Price Adjustment Coefficients:2003-2015 195

Annexure D Augmented Dickey-Fuller Test of Stationarity 203

VI Conclusions and Recommendations 205-213

6.1 Summary and Conclusions 205

6.2 Implications of the Study 209

6.3 Limitations of the Study 211

6.4 Scope for Further Research 212

Bibliography 214-232

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