Dalal Street totally depends on FII Invetment

by khalid on 17/08/2009 · 0 comments

FII set direction of 112768158_7ac8272f24_o42

FII’s increasing involvement in our market is having its own advantages and also some problems too. Now you have to consider fundamentals of stock as well as information about foreign institutions investment to evaluate the real purchase price of a particular stock.So research becomes important and this leads to increasing demands on companies to become more transparent and more disclosures. If we see the numbers of FII flows, It is increasing every year :

FII's Inflows since Reform

YearNet Investment by FII
Rs in crore
1992-934.27
1993-945444.60
1994-954778.60
1995-966720.90
1996-977386.20
1997-985908.45
1998-99729.11
1999-20009765.13
2000-20019682.52
2001-20028272.90
2002-20032668.90
2003-200444000.03
2004-200541416.45
2005-2006
2006-2007
2007-2008
2008-2009
Investment by FII since the begening of reform.

A very welcome side of this inflow of foreign funds is increase in liquidity but at the same time there are always some dangers if certain limits are exceeded. Firstly, the foreign capital is free and unpredictable and is always on the look out of profits. Flls frequently move investments, and those swings can be expected to bring severe price fluctuations resulting in increasing volatility. Here we analyze the comparative trend of sensex and FII, how it affected the market, Here the grey curve shows sensex indeces and black curve shows the FII cash flow, Here we can see how FII cash inflows increases the market indeces and cash outflows decreases the indian stock market indeces:

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This is the way FII is handelling Indian market. Indian Markets are totally swinging with the FIIs inflows. If the are buying our market increasing and if the are selling our market decreasing. This is what is happening in current scenerio.

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