FOREIGN INSTITUTIONAL INVESTMENTS IN INDIAN MARKETS: JOURNEY SINCE SEPTEMBER 1992

Abstract

A milestone policy decision in September 1992 of allowing Foreign Institutional Investors (FIIs) to enter Indian primary and secondary markets was a unique decision of Government of India and had remarkable impact on Indian economy. In real terms there exist a need for foreign currency in India. So when foreign capital is allowed in terms of Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) in Indian economy, country could minimise deficit in Balance of Payment and gain momentum towards growth and permissible developmental projects. Even though FIIs seems to be very volatile on Indian stock market, yet play lead role in terms of dominating Indian stock market. It was noticed that Domestic Institutional Investors and retail investors also move in accordance with FIIs in Indian Capital market. This is an attempt to know the status of FIIs since 1992 in Equity, Debt, Debt Voluntary Retention Route and Hybrid securities till 2020 and hence systematic year wise review of FIIs is undertaken with respect to its number and Asset Under Custody in value. In 1992 FIIs were permitted only in equity segment and in 1996 debt segment was made open to them. The top ten countries with highest FII investment .yealy study of FIIs inflow and outflow shows that major global financial crises have lead to outflow of funds from Indian capital market. Outbreak of Covid 19 also showed the impact on FIIs due to which last month of Financial year 2019-2020 observed more outflow of funds.