GLOBALISATION: IMPACT OF FII’S INVESTMENT ON STOCK INDICES, EQUITY AND DEBT MARKETS ,MARKET CAPITALISATION OF BSE AND NSE AND EXCHANGE RATES OF INDIA –(1999-2009)
Journal Title: International Journal of Marketing and Technology - Year 2012, Vol 2, Issue 2
Abstract
After the introduction of New Economic Policy in India in 1991,foreign investment could face renewed vigour in terms of FII and FDI and hence ,the study analyses the impact of FII on Indian stock market indices of BSE and NSE particularly during the period between 1999 and 2009. It also critically examines the relationship among FII total purchase in Indian equity and debt market, market capitalization of BSE and NSE and exchange rates of Indian rupee in terms of dollar ) International capital flows have changed dramatically over the recent decades and, as a result, the cross-border port-folio investment has been increasing to a remarkable extent among different countries. As such, Ms.Anne O.Krueger(IMF), underlines that “Capital flows play an important role in capturing the benefits of globalisation”1.International capital flows are highly appreciated in emerging market economies if they are absorbed without causing reversal of capital flows. In this situation, Marc Faber (2004) opines “Asia will be the economic hotspot for the next fifty years" and the emerging big stock markets in Asian regions are Hong Kong, China, South Korea, Taiwan and India. In recent decades, apart from FDI, FII,s investment, foreign edge funds ,offshore funds etc are also pumped into Asian markets and have caused growth in investment of different nature. . The trade deficit in US may attract funds from the developing 1.Y.V.Reddy “Capital flows and Indian policy response” Reserve Bank of IndiaBulletin Vol.LVIII Number 3, March 2004 p-314. Countries and may cause volatility to in both foreign exchange and stock exchange markets in Asian countries including India. According to US treasury data, released on June 15, 2010, China invested $900.2 billion in US treasury out of its foreign exchange reserves which amounted to $2.45 trillion. Regarding the Indian foreign currency assets, that was, 264.1 billion as on end of September 2009, were invested in multi-currency and multi-asset portfolios ,of which, the investment in US securities was $US 148 billion and the investment in other central banks, BIS and IMF was $US 111 billion and the investment in deposits with foreign commercial banks and external asset management companies was US$5.1 billion. However, the interest in investing in US treasury by developing countries slowly tends to flucuate a declining trend due the instability in the value of US dollar in the recent periods.
Authors and Affiliations
Dr. Hala Raman
Keywords
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