Abstract
This project has focused on the impact of Foreign Institutional Investment in the stock market
of India. The researcher has divided the overall project in five separate chapters. The first
chapter is all about to introduce the project. It has included the research questions and
objectives. Research aim has also been added there. Other than that a brief description of
Indian Stock Market has also been included in this chapter. The dissertation structure which
has been mentioned in this chapter has provided a basic concept about the project at a glance.
The second chapter is all about the literature part. The researcher has discussed all the
secondary data here. References from various scholars have been added in this chapter to
enhance the authenticity of it. Besides that, addition of conceptual framework would provide
a basic knowledge about the fact discussed in the chapter. Other than that, the researcher has
identified a gap in earlier researches, based on which this project has been composed. In third
chapter, the researcher has discussed about the overall methodology part. It has included the
research philosophy, design, approach, sample size and so on. Post-positivism philosophy has
been chosen and deductive approach has been used here. Other than that, descriptive design
has also been selected by the researcher. Total sample size were 50 and 2. Quantitative
questions were asked to the 50 traders and 2 managers of SEBI have been interviewed by the
qualitative questions.
Apart from that, in fourth chapter, the researcher has discussed all the primary data and the
fifth chapter was dedicated for concluding the overall project. In addition, the
recommendations for identified issues have also been narrated here. In addition, some other
points like objective linking, future scope and limitation so study have made the project more
valuable.
Acknowledgement
I would like to thank to the people without whomI would not be able to complete this project.
First, I would like to give thanks to my friends and family who supported well throughout my
studies. Special thanks and gratitude to my Supervisor who guided me and resolve all my
problems.
Other than that, I am thankful to the respondents as well.
Yours thankful
…………………..
Table of Contents
Chapter 1: Introduction 8
1.1 Introduction 8
1.2 Background of the Research 8
1.3 Rationale of the Research 9
1.4 Problem Statement 10
1.5 Research Aim 10
1.6 Research Objectives 10
1.7 Research Questions 11
1.8 Significance of the Research 11
1.9 Dissertation Structure 12
1.10 Summary 13
Chapter 2: Literature Review 14
2.1 Introduction 14
2.2 Discussing the Overview and Current Changes in Indian Economy 14
2.3 Explaining the overview of Foreign Institutional Investment 17
2.4 Analyzing the Effect of Current Changes in Indian Economy to attract FII 19
2.5 Evaluating the Impact of FII on the Economy of India Emphasizing on Indian Stock
Market 22
2.6 Assessing the Advantages and Disadvantages of FII while investing in India 23
2.7 Gaps in literature 25
2.8 Conceptual Framework 26
2.9 Summary 26
Chapter 3: Research Methodology 27
3.1 Introduction 27
3.2 Outline of Chosen Methods 27
3.3 Research Philosophy 27
3.3.1 Justification of Choosing this Philosophy 28
3.4 Research Approach 28
3.4.1 Justification of Choosing this Approach 29
3.5 Research Design 30
3.5.1 Justification of Choosing this Research Design 30
3.6 Research Strategy 31
3.7 Choice of Selected Research 31
3.8 Data Collection Technique 31
3.8.1 Types of Used Survey 32
3.8.2 Types of Interview 32
3.9 Sampling and Population Method 32
3.9.1 Types of Sampling 32
3.9.2 Choice of Sampling 33
3.9.3 Chosen Sample Size 33
3.9.4 Questionnaire Selection 33
3.9.5 Questionnaire Design 33
3.10 Data Analysis Process 34
3.11 Reliability and Validity 34
3.12 Limitations on Research Methodology 34
3.13 Ethical Consideration 34
3.14 Time Table 34
3.15 Summary 35
Chapter 4: Data Analysis and Findings 36
4.1 Introduction 36
4.2 Quantitative Data Analysis (Traders of Indian Stock Market) 36
4.4 Summary 56
Chapter 5: Conclusion and Recommendations 57
5.1 Conclusion 57
5.2 Linking with Objectives 57
5.3 Limitation of the Study 59
5.4 Future Scope of the Research 59
5.5 Recommendations 60
References 62
Appendices 67
Appendix 1: Quantitative questionnaires 67
Appendix 2: Qualitative questionnaire 67
Glossary
Term Definition
FIIs The institution established outside the India,
proposes to make investment here.
Market size It is a measurement that includes the total
volume of a global market.
SEBI The Securities and Exchange Board of India
is a regulatory for security markets in India
Chapter 1: Introduction
1.1 Introduction
The foreign institutional investment(FII) can be defined as the institution which has been
organized outside the India. The main purpose of FII is to make investment into the security
market of India under the SEBI regulation. It includes mutual funds, asset management
company, foreign pension funds, nominee company, investment trust, institutional portfolio
manager, bank, foundations, university funds, endowments, charitable societies, charitable
funds, power of attorney or trustee may establish outside the India. It would propose to make
proprietary investments. Even, it can invest on the behalf of broad-based fund as well. Thus
this research has chosen FII as the topic of the research. This chapter is one of the most
important parts of the dissertation as it discusses about the reason based on which the project
has been conducted. For providing some practical examples and to relate to this investment
Indian Stock Market has been chosen.
1.2 Background of the Research
Figure 1: Existence of FIIs in India
(Source:Dhingra et al. 2016)
Vardhan and Sinha (2016) have commented that FII has the opportunity for investing in the
own funds and the investment can be applied for the foreign clients too. Institutional
investors would have major influence in corporation management. It was September 1992,
when FII has got permission to be implemented in India. After that until the end of March
2012, 1765 FIIs have been registered by SEBI.The above showed picture is depicting that FII
has stirred the Indian economy. therefore, the current mechanism of Indian stock market also
needs to be changed due to the changing financial scenario. It is being considered as a
primary concern of stock market and that is why discussion on implementation of FIIs is
highly required.
Background of the Company
National Stock Exchange of India Ltd (NSE) and Bombay Stock Exchange (BSE) have
jointly formed the Indian Stock Market. The open electronic limit order book is required to
continuing the trading of these two exchanges. The trading computer matches the order for
both the exchanges in the purpose of continuing their trading.Most of the significant
companies in India have been enlisted in both the exchanges. NSE holds 70% of market share
through spot trading. Even, it has held a monopoly grasp in derivatives trading as well. They
have 98% share in this market (Agarwal, 2016). It has been pointed out that BSE holds
almost 4700 firms in their list whereas NSE has nearly 1200 firms in their list (Mishra and
Zaveri, 2017).
1.3 Rationale of the Research
What is the issue?
The primary issue of this research work is to identify the effectiveness of FII in the stock
market of India. Jalota (2017) has stated that the external and domestic financial conditions
are not the factors that have motivated the contribution of FIIs. Yet, the short-run
expectations have also been shaped through it and it is named as the market sentiment. The
factors of high mobility and speculation in the investment of FII can maximize the volatility
in developing market during the stock return. Therefore, it is required to unveil the
importance of FII investment as the people can get a proper understanding of it.
Why it is an issue?
Several practitioners and academicians have held a wide perception that about the emerging
equity market that the return or price in such markets are very frequent in extended deviations
from the fundamental values along with the subsequent reversals. Therefore, these swings
should be in a large part as it has the influence of foreign capital. Kumar (2017) has added
that volatility indicates a chaotic situation that can limit the FII contribution. It would affect
the stock market of India in a large aspect. That is why, discussing the impact of FII on
Indian stock market is highly required. This turmoil has made it a big issue for the financial
organizations.
Why it is an issue now?
According to Malhotra and Chauhan (2017), volatility discourages the investors to hold
stocks because of the rising uncertainty. In addition, the weak and ineffective regulatory
system of ‘emerging market economies’ may decrease the market efficiency as well. All of
them together is basically reducing the effectiveness of FII. However, the researcher has
identified that it may create a major problem in this regard. Thus, it becomes the issue now
and focusing on it is one of the most essential tasks in recent time.
What could the researcher shed light on?
The researcher may discuss on the effectiveness of FII and the way by which maximum
benefits of FII can be availed. Dhingraet al. (2016) have added that trading through FII
should be happen through a continuous and uninterrupted process, thus the local stock
markets can avail its benefits. The financial organizations may need to take full benefits of
FIIs in their businesses. Hence, this research may focus on the importance of FIIs, which
would emphasize the benefits of it as well.
1.4Problem Statement
In spite of contributing several positive factors in Indian economy, it has been noticed that
some financial agencies are still unaware of the necessity as well as usefulness of it. The
researcher has identified it as a major problem of current time. Thus, composing this research
was very essential as with the analysis of FII’s effects, people may come to know about its
usefulness too.
1.5 Research Aim
The aim of the research is to identify the impact of foreign institutional investment on the
stock market of India.
1.6 Research Objectives
The research objectives are:
To assess current changes in Indian economy for which India has become an
attractive destination for FIIs
To critically evaluate the impact of FIIs in Indian economy and Stock Market
To determine the issues faced by FIIs while investing in Indian Stock Market
To assess the effectiveness of Indian Stock Market in respect to FIIs
To recommend some ways by which the Indian Stock Market support FIIs
1.7 Research Questions
The research questions are:
What are the recent changes in the economic structure of India which make the
country suitable for FIIS?
What is the impact of FIIs in Indian economy and Stock Market?
What are the issues faced by FIIs while investing in Indian Stock Market?
What is the effectiveness of Indian Stock Market in respect to FIIs?
What are the recommendations for Indian Stock Market to adopt FII?
1.8 Significance of the Research
This study is signifying the effect of foreign institutional investment on the Indian stock
market. Vardhan and Sinha (2016) have opined that FDI or Foreign Direct Investment is not
sufficient enough for several multilateral institutions of finance. This is the reason for which
involvement of FII is required. It reduces the capital cost and can be accessed through cheap
credit. Therefore, in current turmoil of world economy, FII is playing a significant role to
boost up the economic engagements. Hence, discussing on this topic would be the most
significant and relevant now.
1.9 Dissertation Structure
Figure 2: Dissertation structure
(Source: Created by author)
The researcher has described the overall structure of the dissertation here. This structure is as
follows:
Chapter 1: Introduction- This is the first chapter of the dissertation. This chapter has
provided an elaborate view of the overall project. The reason behind choosing the particular
research topic has also been mentioned here. In addition, aim, objectives and research
questions have been included in this chapter as well.
Chapter 2: Literature review- This part of the dissertation has focused on the previous
literatures those have been developed by earlier researchers on similar topic. This chapter
helps the researcher in gathering several related data. These data has highly helpful for the
researcher to develop this project. It includes various theories related to the research topic as
well.
Chapter 3: Research methodology- This is one of the most important parts of a research
project as this chapter determines the method based on which the overall research may be
conducted in an effective way. This chapter includes research onion, design, approach, data
collection process, data analysis techniques and so on.
Chapter 4: Data analysis and findings- This chapter is completely dedicated to analyze the
collected data. This chapter is highly significant in this project as it may help the researcher
to draw the ultimate conclusion for this research.
Chapter 5: Conclusion and recommendation- This is the last chapter of a dissertation. the
author has added the overall conclusion of the collected data here. Apart from the conclusion
part, it has included the objective linking, future scope and limitation of the research as well.
The key factor of this part is the recommendations. It has developed by the researcher to
resolve the identified loopholes related to the research topic.
1.10 Summary
This is the introductory part of a research work, thus it is being considered as the most
important part of a project. The significance of choosing this topic has included in this
chapter. On other way, it is better to say that this chapter may help to identify the importance
of chosen topic and overall dissertation at a glance. Besides that, inclusion of research
rationale would provide a better understanding about the identified issue in this project. It
includes four sub-parts and each of the parts has proved the significance of selecting this
issue gradually in a step by step process.
Chapter 2: Literature Review
2.1 Introduction
Literature review is known as the evaluative report which has been formed after analyzing the
literature related to the research topic.A literature review is a part of the paper for academic
purposes that contain the knowledge about the topic along with the substantive findings that
the author comes up with while doing the research work (Talib et al. 2012). It can be said that
the Literature Review is a methodological as well as a theoretical contribution to the topic in
concern. However, it must also be taken into consideration that literature review is not the
report of the original experiment work.It should be a descriptive, clear, evaluative and
summarised review of related literature. This chapter has provided an overview of Indian
economy along with the description of current changes of it. Other than that, explanation
regarding Indian stock market, strengths and weaknesses of FII, its effect on Indian stock
market has also been included here. Apart from that the researcher has analyzed the gap
found in earlier literature too. Basically, this chapter would provide a complete concept about
Indian Stock Market and the present scenario of Indian economy.
2.2 Discussing the Overview and Current Changes in Indian Economy
Proper understanding of the economy in India is best way to compose this research in a right
way. Economy is related to everything and proper knowledge in it means to consider things
in a larger perspective.The economy of India is a very mixed economy as well as a
developing one. The economy of India is the sixth largest economy by nominal GDP, and by
PPP or Purchasing Power Parity, the country’s economy ranks at third biggest. As per the
reports of 2016 by per capita nominal GDP, India has a rank of 141 with $1723 (Binswanger-
Mkhize 2013). Again, India is at the 123rd position by per capita PPP GDP with $6616
(Agrawal 2015). By the year 2017, the Indian Economy became the world’s fastest-growing
which even had surpassed China.Srinivas (2016) has mentioned about three sectors in Indian
economy. They are primary, secondary andtertiary. The primary sector is related to
agriculture, which is one of the most common and important activity for the people in India.
The secondary sector indicates to the industries. In addition, the tertiary sector is all about the
service related activity. These three sectors are the main sources by which the economy of
India is earning maximum profits.
The researcher has taken a note to the history of Indian economy where the First Plan has
been found to be don between 1951 to 1956. It was a total budget of Rs. 2069 crore at that
time. Yet it was increased later on and becomes 2378 crore (Kumaraswamy et al. 2012). That
plan has divided money for each of the department like energy and irrigation has got 27.2%,
community development and agriculture was being allotted by 17.4%, communication and
transport have got 24%, industry was being allotted for 8.4%, 16.64% was allotted for the
social services, 4.1% was being invested for the land rehabilitation and other sectors as well
as services have got 2.5% (Binswanger-Mkhize, 2013).
Figure 3: Targeted growth rate of Indian economy
(Source:Goldar and Goldar, 2016)
According to (Boutabba, 2014), in the first plan the target GDP growth was about 2.1% per
year. On the other hand, the achieved growth rate has become 3.6%. The time validity of a
financial plan is five years. Therefore, till the present year 12 plans have been made by the
government. This twelfth plan has been made in 2012 and would be validate till 2017. This
plan has decided about the growth rate of 8.2%. The current government is intended in the
reduction of poverty up to 10% during this plan (Hudson.org. 2017). Therefore, it can be said
that Indian economy is growing fast and it is expected that the plan would be successful very
soon.
Market size of Indian economy:
As stated by Ahmadet al. (2016), India is being considered as the fastest growing economy.
Both the International Monetary Fund (IMF) and Central Statistics Organisation (CSO) have
declared that Indian economy has changed and developed rapidly in comparison to other
emerging countries. It has been forecasted by Indian Government that in the financial year
2016-17, Indian economy would get a hike of 7.1%. The growth in the GDP has made the
economy of India the strongest among the G-20 countries, according to the Organisation for
Economic Co-operation and Development. Moreover, it is expected by the IMF World
Economic Outlook Update; the Indian economy would grow 7.2% during FY 2016-2017 and
has the possibility and potential to increase even further, to 7.7% during the year of 2017-18
(Kumaraswamy et al. 2012). On the other hand; an economic survey has declared that a
massive growth would be seen in Indian economy, which would be between 6.75% and 7.5%
in 2017-18 (Hudson.org. 2017). The consumer confidence rate in India has stand at 136 in
the 4 th quarter of last year. Neison, the agency of market research has declared that India has
gained a good score in the consumer record globally. It values the sentiment of the
consumers. The corporate earnings of India are supposed to increase by over 20% in the year
2017-18. The earnings are expected to grow with the support of normalisation of profits. The
GDP of the country is also projected to increase by 7.5% over the same period (Boutabba
2014).
GDP growth rate in Indian economy:
Figure 4: GDP growth of Indian economy
(Source:Nagaraj and San, 2017)
In India, the growth rate in GDP refers to the change in the value of goods and services by the
Indian Economy, adjusted seasonally. India is the second most populous country, and along
with that, the country has the tenth largest economy in the world. Services are the most
important and the fastest growing sector of the Indian Economy. Services like Hotels, Trade,
Financing, Transport and Communication, real estate and business services, social and
personal services account for more than 60% of GDP (Ahluwalia and Little 2012).Besides
that,Goldar and Goldar (2016) have commented that the Gross Domestic Product (GDP) in
India has grew up to 7% every year in the last quarter of 2016 in October- December. It is
been considered as the strongest among the nations enlisted in G-20. Even, the amount of
collected tax is also showing an increment of 16.9% in the Net indirect tax. Similarly, the Net
direct tax has also been increased up to 10.79%. On the other hand, Lindberg and Jütting
(2016) have added that this development is a proof of healthy and spontaneous growth. The
amount of income tax return those has been e-filed has grown from 21% to 42% in last
financial year. The total amount is 42.1 million in 2016-17 (Ibef.org. 2017).
Linet al. (2016)have claimed that the corporate earning in India may be grown up to 20% in
this financial year. They would get the support especially from banks and automobiles. It is
expected that GDP would also be grown up to 7.5% in the same time. On the other hand,
Ferreiraet al. (2017) have mentioned that India has established its position as in third largest
base for start ups. Almost 1400 new start ups have started their journey in 2016. Even, within
2010, the labour force of India would reach 160-170 million. The foreign exchange of this
country has reserved US$ 366.781 billion in March 2017. It was only US$ 360 billion in
March 2016 (Hudson.org. 2017). This current development in Indian economy has boosted
up several M&A activities in the country.
2.3 Explaining the overview of Foreign Institutional Investment
According to Luonget al. (2017), the Foreign Institutional Investment refers to those
investors who prefer to invest in assists of a different country. In other words, Foreign
Institutional Investor means an establishment or an institution outside India proposes to make
investments in the security of India (Buchanan et al. 2012). This term is commonly used for
the companies outside India making their contributions to the financial markets of India. The
foreign institutional investors are any significant investor that operates and does business in a
country rather than the one in which the investment instrument gets purchased. The countries
with developing economies like India have the highest volume of foreign institutional
investment. These investments provide the economies with higher growth potential than
maturity. This is a huge reason why the investors are commonly found aiding Indian
economy, registered with the Securities and Exchange board of India. These investors
mainly invest in such nations where their organizations have already been established. They
are the most important factor of the economic scenario of any country. Chenet al. (2017)
have argued that a well established and strong financial market is the ultimate element that
makes a country developed from the economic perspective. It is being considered as the
economic system that supplies the required financial inputs for producing goods as well as
services. In return they promote the living standard and the well being of the people of the
country. Therefore, making India financially strong should be the first priority of its
government. However, from the perspective of emerging it is being considered that India is
rapidly growing and keeps a constantly developing economic scenario. Several foreign
investments like FDI and FIIs are there to leverage the development.
Breaking down of Foreign institutional investors:
Figure 5: Examples of Foreign Institutional Investments
(Source:Solomon and Aggarwal, 2017)
FIIs include hedge funds, companies, insurance, mutual funds and pension funds. Selvam and
Raman (2017) have commented that FII is being considered as a major investor that performs
business in such a country from where the investment instruments have not been purchased.
FIIs take position in an overseas economic market on the behalf of its own country where
they are being registered. Mishra and Zaveri (2017)have stated that developing markets
provide major potential for the growth in upcoming future. This opportunity has attracted
several investors from United States as well as other countries. Multiple investments are there
those have made as FII. Especially three investments are there those have been referred to
‘hot money’. Basically, these investments have always represents the substantial sums which
could be withdrawn any time from the market.
FII in India:
Hiremath and Kattuman (2017) have opined that countries with emerging economy have the
maximum volume of foreign institutional investments. This kind of economy produces the
maximum potential of growth to the investors than a matured economy. This is the main
reason for which these investors prefer to invest in India. All of them have registered to the
Securities and Exchange Board of India for participating in this market. Jalota (2017) has
provided examples in this support as a company of mutual fund may find opportunity in
Indian market and that is why the company may invest here. However, all Foreign
Institutional Investors are allowed to invest in Indian Economy as well as in the primary and
secondary capital markets of India only through the portfolio investment scheme of the
country Through this scheme; the foreign institutional investors are allowed to purchase
debentures and shares of companies of India on the standard public exchanges. However, this
project also comes with a set of regulations as well. This law establishes a ceiling for all and
every foreign institutional investor to have a maximum investment amount of 24% of the
paid-up capital of the investment that the Indian companies receive. Moreover, through board
approval and the passing of the special resolution, this maximum investment limit can be
increased from 24%. However, for the investments in the public sector banks, the ceiling of
maximum investment limit gets reduced to 20% (Srikanth and Kishore 2012). These ceilings
and limits for all foreign institutional investors and investments are monitored by the Reserve
Bank of India on a daily compliance. The compliance is checked through the implementation
of the cut-off points 2% below the maximum possible amount of investment. In this way
before the allowance of the final 2% to be invested, the Indian company gets a chance to
caution before receiving the investment. They could be able to buy the equity on the public
exchange of India as well as would take lo
ng position to the high growth stock. The domestic private investors should also be benefitted
from this approach. Actually, it has been noticed that these investors may not get the chance
to be registered with SEBI. Rather they would get the opportunity to invest in several mutual
funds should take part in potentially high growth.
2.4 Analyzing the Effect of Current Changes in Indian Economy to attract FII
As per the above discussion, it is understandable that In spite of being counted in the list of
third world country, still the nation is developing very fast. Especially, the foreign investors
are discovering India as one of the best market to invest in. Mohanasundaram and
Karthikeyan (2017) have opined that the best proof of this development is the high increment
of merger and acquisition rate in the country. Ahmad and Khan (2017) have emphasized on
the recent change of Indian attitude that the country is showing more interests on business
activities. It has inspired the foreign investors more to invest in this country.
Impact of GST on Indian economy:
Figure 6: Impact of GST on Indian economy
(Source:Sinha, 2017)
The biggest Tax reform in India named GST was entirely formed on only one notion, “One
nation, one market, one tax”. The introduction and the implementation of this GST in the
Indian market have been very much successful and profitable for the Indian Economy. The
single biggest indirect tax regime, named GST kicked into force while dismantling all the
other individual taxes that varied with states and trades. With a single rollout, the stroke of
GST converted the country in a unified market of 1.3 billion citizens. Through doing away
with all the state and local taxes along with the internal tariff barriers, the $2.4-trillion
economy is trying to transform itself through a unified GST (Cnossen 2012). The GST has
the potential to widen the economy of India and regain the momentum through economic
reformation programs. However, there are also risks of disruption due to the rushed transition
which may not act in favour of the interests of the country. However, the impact of GST on
the Indian economy, whether good or bad, ultimately relies on the application of the
Government. It is widely accepted by the manufacturers and traders that the implementation
of GST would to a large extent simplify the taxes regarding their businesses (Sehrawat and
Dhanda 2015). With fewer tax filings, easy bookkeeping, transparent rules, the lesser need of
payment by the consumers, and above all through the plugging of revenue leaks, the
Government would generate more revenues. As stated by Sinha (2017), India is in the top list
for most of the foreign investors. The latest change in Indian economy is all about the
inclusion of GST (Goods and Service Tax). It has made India more attractive to the foreign
investors. Strong macros, controlled economic deficit and stable currency are the major
components those have made the country developed in comparison to other emerging nations.
Srinivas (2016) has argued that it is not all about the comparison, it actually shows the
probability of foreign investments. If it should only be considered from this perspective, then
the amount of Rs 31,778 crore should be mentioned as the investment from Foreign Portfolio
Investor (FPI). It results an inflow of Rs 27,055 crore last year (Ibef.org. 2017). It is expected
from the implementation of GST, as long-term benefits, the implementation of GST would
not just refer to the lower rate of taxes, but it would also minimise the tax slabs. However, it
can be seen that the impact of GST on the indicators regarding the macroeconomic situations
is likely to be quite confident (Garg 2014). Through the elimination of the cascading effect,
the Inflation is most liable to be reduced. Due to an extended tax net, the government is very
much likely to grow more revenue from the taxes. Moreover, along with the increment of the
FDI or the Foreign Direct Investment, the exports will increase as well.
Foreign investors are interested in domestic stock. Almost 269 new FPIs have registered their
names with Security and Exchange Board of India (SEBI), the regulator of capital markets in
the month of April (Hudson.org. 2017). It is obviously an indication for the growth story of
Indian economy. FPIs are willing to invest here in Indian market as they consider it as better
destinations for investments. Thus, the total number of registered FPIs in SEBI is almost
4580. Ahmadet al. (2016) have stated that Indian Government has taken a remarkable step in
reducing the amount of black money. It is definitely a golden opportunity by which India can
get more developed financial circumstances.
Effect of demonetization in Indian economy:
Nagaraj and San (2017) havenarrated that Indian government has announced to ban the old
notes of 500 and 1000 in 8 th November 2016. it was an attempt regarding demonetization of
higher level denomination regarding those bank notes. It was all about to take control over
the black money as well as to stop the growth of fake notes of Indian currency. Due to this
strategy almost 86% of currency has been nullified as they were being aimed to be converted
to the white money through the cash supply of black market. Goldar and Goldar (2016) have
commented that It was a part of Indian economy and very common strategy applied by a
large part of rich Indian people. However, apparently, this phase was mismanaged, but the
micro level has got its effect. Several illegal activities such as financing in terrorism and false
auditing of property and cash have been controlled by it.
2.5 Evaluating the Impact of FII on the Economy of India Emphasizing on Indian Stock
Market
The definition of FII has been discussed earlier as it is an institution that has been organized
outside India to invest in the security market of India. Lindberg and Jütting (2016) have
added that FII Includes mutual funds, pension funds, assess management business
organization, investment trust, manager of institutional portfolio, bank, Nominee Company,
university funds, charitable secretaries, endowments, charitable trusts, foundations, trustee or
the holder of power of attorney established or incorporate outside India. Linet al. (2016) have
stated that FII can invest own funds of them and on behalf of the foreign clients as well.
Impact of FII on Indian economy:
FII leads an appreciation of the currency. It needs to maintain the account with the Reserve
Bank of India and all the transactions should be noted there. Ferreiraet al. (2017) have
suggested that strong flow of FII can include lot of funds in stock market. Large amount of
foreign investment may create huge demand of Indian rupee. Therefore, excess liquidity can
result inflation. On the other hand, it brings an enhancement in equity capital’s flow. Luonget
al. (2017) have opined that not only about the economic development, it helps to improve the
corporate governance as well. After analyzing the opinions of these scholars it can be said
that FII makes profit for the entire Indian financial structure.
Impact of FII on Indian Stock Market:
Figure 7: Overview of Indian Stock Market
(Source:Chen et al. 2017)
According to Solomon and Aggarwal (2017), FII contributes specifically among the
companies those are being included in Sensex (Sensitivity Index)of Stock Exchange in
Bombay. It has been noticed that the overseas investors are more interested to invest in those
business organization which have higher share volume holds by the general people. There has
an inverse relation between foreign investments and promoters’ holdings. Foreign investors
generally prefer those firms which have not much of family shareholders. Selvam and Raman
(2017) have added that among the investment decisions of foreign investors can be
influenced by per share earnings and returns of the shares.
Mishra and Zaveri (2017) have suggested that a thorough review of stock exchange is highly
required now. Even the liquidity position should also be improved. In a brief it can be said
that FII has enlarged the stock market of India from both the breadth and depth. FIIs play the
most important role to expand the security businesses. Hiremath and Kattuman (2017) have
commented that most of the policies of FIIs have focused on the fundamental of share and the
efficient share pricing is responsible for it. It is such an effective in Indian market as
whenever these investors plan to withdraw money from the market, the domestic investors
get afraid and withdraw their own money also.
2.6 Assessing the Advantages and Disadvantages of FII while investing in India
The above discussion has produced a positive opinion about FII. Yet, it is not possible that no
negative feature has been found in FII. According to Jalota (2017), Foreign Institutional
Investment has both the positive and negative impacts on Indian economy. In spite of both
the effects, the economists in India have suggested to avail its advantages because it has
brought a remarkable change in Indian economy. However, positive and negative both the
features have been mentioned as well as discussed as follows:
Advantages of FII:
Mohanasundaram and Karthikeyan (2017) have added that Foreign Institutional Investments
is the key that enhances the flow in equity capital. Basically, it mostly prefers equity rather
than the debt in the asset structure of them. Opening up the economy to the Foreign
Institutional Investment should be in a line with its accepted preference for the non-debt
created foreign inflow over the foreign debt. Increased flow of equity capital would be
helpful to increase and for developing the capital structure. Even, they should also influence
to contribute in the identification of investment gap. On the other hand, Ahmad and Khan
(2017) have argued that not only about to this enhancement, FII is beneficial for managing
the financial uncertainty as well as to control the fiscal risks too.
Other than that, FII is profitable for financial innovation also. Sinha (2017) has included
here that it further helps in developing the hedging instruments as well. It enhances
competitions in the financial market and develops the alignment in asset prices for the
fundamentals. Other than that, making improvement in capital markets is another
advantage of FII. Sinha (2017) has commented that FII can work as a professional body for
managing the assets. On the other hand, the role of financial analyst may also be served by
FII. The development of equity market also helps to develop the economy, therefore
contribution of FII cannot deny anyway.
Apart from all the above mentioned advantages, FII helps India in the improvement of its
corporate governance also. Srinivas (2016) has stated that FII includes some professional
people specialist in asset management and financial analysis. They have better understanding
about the operations of firms and improvement of corporate governance. However, it can be
said that arrival of FII has changed the financial situation from many aspects and it is
expected that India would be more benefitted in future. In spite of such advantages several
disadvantages are also there. All the disadvantages have described as follows.
According to Ahmadet al. (2016), inflation is the major problem which can be raised due to
FII. Huge amount of funds that have been flown in the country creates demand of currency.
RBI pumps the amount into rupee and therefore the demand increases. Small investors may
face problems in it. FII usually earn profit due to the investment in the financial stock
market of emerging countries. If FII would be high, therefore they would be able to invest
large amount of money in the stock market of the country.
Nagaraj and San (2017) have stated that export sector is usually being affectedthrough FII.
The export industry becomes uncompetitive and therefore the productivity has reduced. ‘Hot-
money’ should be mentioned as another problem of FIIs. This term indicates to the meaning
of fund. This fund is being controlled by the investors especially those are seeking for short-
term return.Goldar and Goldar (2016) have commented that the market has been scanned by
these investors on a short-term basis. It provides high rates of interests in investment
opportunities. Hot money may have economic repercussions on the banks and countries. If
money would be injected into a nation, therefore the exchange rate of the country may gain
strong money. On the other hand, if the exchange rate may loss, therefore the money may be
weakens. Even, if money would be withdrawn therefore a shortage may appear.
2.7Gaps in literature
The researcher has gone through several scholarly articles to gather data about the current
impact of FII in Indian economy. It has been seen that this is a very common topic for
research and multiple researchers are there those have already made projects on it. In spite of
that, a major gap has been identified there in the researches of earlier scholars. Most of
thescholars have mainly focused on the definition of FII and the reason for what the foreign
investors prefer to invest in India.
Other than that, for discussing on the topic, secondary data have been gathered as well as
analyzed. For example, V. Aditya Srinivasin hisarticle Indian Capital Market – Impact of
FII on Indian Stock Market in the journal namely Indian journal of Science and Technology
has discussed about the importance of FII money in the stock market of India. Thus, Srinivas
(2016) has commented that a safety net is required by which the investors may get a proper
understanding of FII and they may get protection from the false investment. However, no
primary data in this regard has been collected. Therefore, this research would focus to gather
both the secondary and primary data as the authenticity may be enhanced.
2.8 Conceptual Framework
Figure 8: Conceptual Framework
(Source: Created by author)
2.9Summary
This chapter has provided a complete knowledge of the theoretical base of Foreign
Institutional Investment and its importance in Indian economy. Other than that, an elaborate
discussion on the current development of Indian economic scenario has made this chapter
more acceptable and significant for this research project. The discussion has included the
opinions of several scholars. After analyzing all the opinions, the researcher has identified the
gap based on which the research work can be composed. This chapter has mentioned about
GST which is the hottest topic of Indian economy and the researcher has explained that
implementation of GST has changed the economy remarkably. It works as a key element to
boost up the development of this economy.
Impact of FII on Indian Stock
Market
Overview of Indian
economy
Current
Changes in
the Economy
of India
Effect of recent
changes in Indian
economy
Impact of FIIs on Indian
economy from the perspective
of Indian stock market
Overview of Foreign
Institutional Investment
Strengths and weaknesses
of FIIs
Chapter 3: Research Methodology
3.1 Introduction
As per the title of the chapter, this part of the dissertation is all about the methodology for this
project. The researcher would outline the research method through which the overall project
should be carried on further. This chapter would discuss about the data collection process,
techniques for collecting the data and the instrument as well. However, the ethical assurance
would also be provided by the researcher as no confidentiality would be broken up. Other
than that, research philosophy, approach and design have also be discussed here. Besides that,
a time table has been provided here which would depict the time that has been taken by the
researcher for every activity.
3.2 Outline of Chosen Methods
Vaioleti (2016) has commented that methodology is being considered as the systematic and
theoretical analysis of the study as well as the principles associated with the knowledge. It
basically incorporates the ideas like paradigm, qualitative and quantitative techniques, phases
and theoretical models. In this particular research, the researcher would choose the post
positivism philosophy, descriptive research design and deductive approach. In addition,
proper justification has also been provided by the researcher in support of choosing research
approach, philosophy and design. Both the primary and secondary data have been collected
for this research work. The data collection sources and sample size both have mentioned here
by the researcher.
3.3 Research Philosophy
According to Silverman (2016), research philosophy is known as the belief depending on
which specific phenomenon has been analyzed, collected as well as used. This is true that the
selection of a specific philosophy effects the practical implication of the study. research
philosophy can be defined as a belief regarding the way in which the data about a
phenomenon can be collected. Three different types of research philosophies are there. They
are realism, positivism and interpretivism. Realism research philosophy is all about the idea
derived independently from the human mind. On the other hand, Humphries (2017) has
commented that while discussing the interpretivism research philosophy the idea is mainly
derived from the subjective phenomena as well as the real invention is easily understandable.
Other than that, when the phenomenon would be isolated and observation would be
reasonable, then it can be called as the positivism research philosophy. Post-positivism
philosophy is an updated version of positivism philosophy.
3.3.1 Justification of Choosing this Philosophy
As this research is on the impact of FII on Indian stock exchange, the researcher has chosen
the post-positivism philosophy. the reason of choosing this philosophy is that the knowledge
about the matter have been generated based on the positive data. This research work has been
conducted based on the facts of earlier research papers. Therefore, post-positivism research
philosophy is most suitable for it. It is really helpful for analyzing the data as it consists a
historical tradition which can define the knowledge demands supported with the unscientific
research (Kurinczuk et al. 2016). On the other side, the realism research philosophy has not
been chosen as most of the data would be analyzed through a scientific research. Other than
that, some interpretations should be analyzed through the social constructions such as
consciousness, shared meanings and language. Marais and Pienaar-Marais (2016) have
opined that the selection of post-positivism research philosophy promotes the objectivity idea
towards confirmation and falsification of the specific position. Therefore, the researcher
could start with the theory as well as earlier facts and would formulate a hypothesis and even
the data collection would also be done in accordance to it.
3.4 Research Approach
Figure 9: Research approaches
(Source:Patino et al. 2016)
Wiek and Lang (2016) have discussed that the research approach can be divided into two
types, they are inductive and deductive. In deductive approach, the conclusion would be
made based on the agreed and measurable facts. Besides, establishment and building of facts
for the approach creates the deductive arguments. This approach follows a particular
sequence that is to start from the general principles by which the researcher can made the
deduction. After that it should be carried out through the conclusion where the statement
would be linked up with the specific situation. On the other hand, the inductive approach
demands new facts from the observation. The, researcher has chosen the deductive approach
for this project.
3.4.1 Justification of Choosing this Approach
As stated by Mackey and Gass (2015), deductive approach should establish the role, for
defining the existing theory as to develop the hypothesis as well as the variable choices.
Inductive research has not been chosen for this project as the enquiry areas in this research
has been composed on the basis of the representation of hypothesis and the existing theory.
The researcher has started collecting existing models, theories as well as the background data
related to the topic. therefore, the deductive approach would be the most suitable for this
project. With the help of existing data, the researcher becomes enable to make the research
questions. However, the responses of these questions should be retrieved along with the
surveys and questionnaires, which may end up to a positive conclusion.
3.5 Research Design
Figure 10: Research design
(Source:Taylor et al. 2015)
Research design is being considered as the set of processes as well as methods which should
be used to analyze and collect the specified variables for research problem. Four different
types of research designs are there. They are: Descriptive, confirmatory, explanatory and
exploratory. Panneerselvam (2014) has opined that the exploratory research design is needed
when the when the researcher may make a brief focus on a familiar as well as insight
investigation procedure. Other than that, the explanatory research design can be analyzed as
an attempt to explain the cause and effect of that specific research. Besides that, the
descriptive research design explores and explains while including some additional
information about a particular topic.
3.5.1 Justification of Choosing this Research Design
The researcher has chosen the descriptive research design for completing this project.
Silverman (2016) has mentioned that descriptive design is basically a conclusive design that
can set the objectives for describing the characteristics and opinions of the respondents. In
addition, the descriptive design contains a prior formulation for analyzing particular questions
as well as the hypothesis of the research. Kaoet al. (2016) have stated that descriptive
research should be defined in large samples. Other than that, the confirmatory research has
not been chosen by the researcher as the probability of result should be based on coincident.
On the other hand, for the explanatory research design, the attempt should contain a good
outcome. Yet, it would not be possible in this research. Besides that, the exploratory design
has not been chosen as it needs a flexible approach for understanding the impact of FII on
Indian stock market. Even, this would be very hard to measure. Therefore, after assessing all
the aspects, it can be said that descriptive design would be the most suitable for this research
paper.
3.6 Research Strategy
Smith (2015) has mentioned about two strategies for conducting a project and they are
qualitative and quantitative research strategies. The quantitative research strategy helps in
quantifying the behaviour, attitudes as well as opinions with other variables. Other than that,
the qualitative research strategy provides a core understanding about the opinions and
motivations as well as the reason of the research. Therefore, both the strategies have been
used here to complete this research work.
3.7 Choice of Selected Research
The choices of this project are survey and interview both. It is related to the deductive
approach. The survey method is quite frequent to be used in responses of the questions like
‘how often’, ‘do you’, ‘what’, ‘why’ and ‘how far’. Apart from that, the questions are easy to
answer and comparison can be made easily. A reliable manner has been followed while
conducting this research, thus it provides an effective understanding as well as explanation of
the phenomena along with the vast research. In one side, survey provides an idea about the
opinions and attitudes of the respondents, on the other side interview includes a proper
knowledge about the detail of the fact. Therefore, amalgamation of both the choices have
made the research paper more accurate.
3.8 Data Collection Technique
As stated by Bauer (2014), two different types of data collection techniques are there, they
are primary and secondary. Both of them have been used in this project. The qualitative and
quantitative methods are being connected to the primary data. Survey questionnaire would be
used to collect the quantitative primary data. Besides that, On the other hand, Tuohyet al.
(2013) have opined that the secondary data is all about the collection of earlier facts and
theories. Therefore, the researcher has gone through several books, journals and visited
multiple websites for gathering the secondary data. In this research, the secondary data have
been used mainly in the literature review part. Though it has been linked up with the primary
data as well. Basically, secondary data could be accessed easily and the collection process is
not much hazardous.
3.8.1 Types of Used Survey
The researcher has chosen a face to face survey process for collecting the quantitative
primary data for this project. The sheets of pre-set questionnaires have been distributed
among the respondents and they are being asked to fill up in accordance to their opinions.
3.8.2 Types of Interview
The researcher has arranged the telephonic interviews with the respondents to collect the
primary qualitative data.
3.9 Sampling and Population Method
According to Silverman (2016), population can be defined as an combination of elements
those share some common features regarding the issues of the research. On the other hand,
sampling is known as where the overall procedure is needed to select the group of
representative from the assessed population. It also defines the frame of population by
identifying the research structure with the measurable events.
3.9.1 Types of Sampling
As stated by Vaioleti (2016), two types of sampling are there, they are non-probability and
probability. Both of them are associated with the primary data collection. The probability
sampling is suitable for the interview sessions where the researcher can get more accurate
data rather than the survey method. In response of survey, there is high chance to produce
false replies as the respondents are being randomly chosen by the researcher. Thus,
probability sampling is the best way for it. Hence, for this research the researcher has selected
both the probability and non-probability sampling.
3.9.2 Choice of Sampling
The reason behind choosing both the sampling in this project as survey and interview both
have to be conducted by the researcher. Humphries (2017) has discussed that in large
population it is quite difficult to identify the each member of the population. Therefore
probability sampling is suitable for the survey respondents. On the other hand, as the
members of interview could be identified by the researcher so non-probability sampling
would be the best for it.
3.9.3 Chosen Sample Size
The researcher while conducting the project based on the impact of FII on Indian stock
market would select 100 respondents randomly. The responses of these people would be
analyzed by quantitative method. Among the 100 respondents, the researcher would choose
50 by applying the probability technique. On the other hand, 2 representatives of SEBI would
be chosen for completing the interview sessions. These responses would be analyzed through
qualitative method. Therefore total sample size would be 50 and 2.
3.9.4 Questionnaire Selection
The questionnaire has been composed based on the research objectives those have been
mentioned in the first chapter of the project. for both the quantitative and qualitative
questionnaires the researcher would try to focus on the impact of FII on the Indian stock
market. The survey questionnaire would be close ended whereas the qualitative questions
would be open ended.
3.9.5 Questionnaire Design
The questionnaire would be designed based on the researcher’s perspective. Basically, it
depends on the way in which the researcher wants to conduct the survey. Kurinczuket al.
(2016) have stated that the researcher should ask questions related to the topic. The
researcher would put near about 15 questions in survey sheets and 5 questions would be
scheduled for the qualitative part. The close ended quantitative questions would be answered
by choosing the options like ‘strongly agreed’, ‘highly satisfied’, ‘neutral’, ‘strongly
disagreed’, ‘highly dissatisfied’, ‘agreed’ and ‘disagreed’. Other than that, some of the
questions may also be answered by ‘yes’ or ‘no’ options. On the other hand, the qualitative
questionnaire would be answered in paragraph form.
3.10 Data Analysis Process
The quantitative data would be analyzed in MS Excel format. However, the findings of both
quantitative and qualitative would be written on MS Word document.
3.11 Reliability and Validity
According to Marais and Pienaar-Marais (2016), reliability seems to be the extent in which
the consistent result would be produced. Repeated practice and the same result for each of the
time may maximize the reliability of the outcome. On the other hand, validity is basically
concerned about if the result is performing precisely or not.
3.12 Limitations on Research Methodology
While conducting this research work, the researcher has faced some issues or limitations.
Elaborate research has been done by the researcher to gather the information or data. For the
survey, the researcher was decided to target limited number of people as the respondents.
However, after starting the work the researcher has realized that the survey sheets should be
distributed at least among 100 people. Thus, 50 can be selected.
3.13 Ethical Consideration
Some ethical norms should be obeyed by the researcher while conducting a project. Patinoet
al. (2016) have discussed that the respondents can withdraw their participation any time from
the survey and the researcher cannot force them anyhow. Even, the personal information of
respondents would not be disclosed. The researcher has obeyed all the ethical norms. No
privacy of the respondents have been publicised. No personal data of the respondents have
been used. The researcher has followed the Data Protection Act 1998 with full respect. Even,
the researcher has not forced anyone to take part in this project.
3.14 Time Table
Activities 1 st to
3 rd
week
4 th to
6 th
week
7 th to
9 th
week
10 th
to
12 th
week
13 th
to
15 th
week
16 th
to
18 th
week
19 th
to
21 st
week
22 nd
to
24 th
week
Choosing the research topic
Background of the project
Determining the aims, objectives
and Questions of the research
Literature review
Determining the methodology
Analyzing the surveys
Scheduling the Time Plan
Findings for the research
Analyzing the collected Data
Concluding the overall research
Self Reflection
Submitting the project
Table 1: Ganttchart
(Source: Created by author)
3.15 Summary
Research methodology is such a way that show the route by which the project can be carried
on. Thus, this chapter includes a special value in every dissertation. There researcher has
discussed about the philosophy, approach and design here along with the reason of the
selection. Other than that, a basic conception about these three have also been narrated here
in this chapter. Apart from that, data collection method, data analysis techniques, ethical
consideration and limitation of methodology have also been narrated here. The researcher has
used survey questionnaire and conducted interviews to collect the primary data. Thus, this
research becomes more authentic and fact-full.
Chapter 4: Data Analysis and Findings
4.1 Introduction
This is one of the most important chapters in this research work. The collected data here
would analyze the predicted visions of the research. This chapter would determine that the
researcher has tried with full effort to frame out the derivatives by primary data. In addition,
this part of the research would identify the questionnaires which are influenced by the fact of
impact of Foreign Institutional Investment on Indian stock market. The researcher has
distributed the survey questionnaire among the Indian people aged between 20 to 60. These
respondents are the business operators in Indian stock market. As the primary research work
needs the involvement of respondents, the researcher has distributed the survey
questionnaires among the people. The quantitative data have been documented in a tabular
format whereas the qualitative data have been noted in a paragraph style. In addition, the
research objectives would also be framed in with the study in a better way through this
analysis part.
4.2 Quantitative Data Analysis (Traders of Indian Stock Market)
The researcher has distributed the survey questionnaire randomly among 100 traders who
deals in Indian stock market. Among them 50 responses have been considered here to carry
on this research project. 10 close ended questions have been asked to the people those are
being already engaged in trading in the stock market. The options have been provided such as
‘yes’, ‘no’ or ‘agreed’, ‘disagreed’ and the respondents need to select the answers of their
own choices from there. The involvement of theses respondents were completely
spontaneous. No pressurization has been created on them. Even, no personal question has
been asked and it has been ensured that the respondents can avoid any question by not
providing its answer.
In addition, the researcher has counted the mean, median, mode and standard deviation
against each of the answer. The data has been showed in additional charts. Two demographic
questions are there those have been asked to the respondents to get an initial information
about them. The data have been showed in tabular format followed by the chart. After the
completion of chart against each of the data, the researcher has added two different points,
namely ‘findings’ and ‘analysis’. In the finding part, the researcher has added the numbers or
amounts which have been gathered by the responses. The analytical part contains the
narration and the assessment which has been done by following the flow of responses. While
analyzing the quantitative data, the researcher has linked up them with the literature review
part as well. It enhances the validity as well as the authenticity of the data.
Q1. What is your gender?
Options Responses Total Respondents % of Respondents
Male 27 50 54%
Female 23 50 46%
Table 2: Gender of the respondents
Mean 1.46
Median 1
Mode 1
Standard
Deviation 0.503457
MaleFenale
0
10
20
30
40
50
60
70
80
90
27
23
50
50
54%
46%
Responses
Total Respondents
% of Respondents
Figure11: Gender of the respondents
Findings
Among the respondents there were 27 male and 23 female. Therefore, the percentages are
like 54 and 46 respectively.
Analysis
While analysing this amount, two assumptions can be developed. First of all, there could be
more male investors or trader operators in Indian stock market. Secondly, the female
respondents probably were not much interested in taking part in this survey. Whatever the
reason is, ultimately it is being showed that the number of male investors is more than the
female investors in Indian stock market. This is a general demographic question, thus it has
no need to relate to the literature review part.
Q2. Which age group do you belong to?
Options Responses Total Respondents % of Respondents
20 to 30 12 50 24%
31 to 40 20 50 40%
41 to 50 10 50 20%
51 to 60 8 50 16%
Table 3: Age group of the respondents
Mean 2.28
Median 2
Mode 2
Standard
Deviation 1.01096
20 to 30
31 to 40
41 to 50
51 to 60
Figure12: Age group of the respondents
Findings
12 people were between the age group of 20 to 30. On the other hand, 20 respondents were
there those belong to the age group of 31 to 40. 10 respondents among the 50 were there
those belong to the age group of 41 to 50. Only 8 people were there those are aged between
51 to 60.
Analysis
This is also a demographic question. It has been asked to ensure the ages of participating
people. The ratio has proved that most of the young people are interested in the business of
stock market. Though the middle aged people are not in the backbench. A good number of
this people have joined this survey as well. Yet, most of the interest may be grown among the
people of aged between 31 to 40. This is again a demographic question which is related to the
age group of the respondents. Thus, no linking up with the literature review part is needed
further.
Q3. Are you involved in other business except the sharing brokering?
Options Responses Total Respondents % of Respondents
Yes 26 50 52%
No 24 50 48%
Table 4: Businesses of the respondents
Mean 1.48
Median 1
Mode 1
Standard
Deviation 0.504672
YesNo
0
10
20
30
40
50
60
26
24
5050
48%
Responses
Total Respondents
% of Respondents
Figure 13: Businesses of the respondents
Findings
In response to this question, 26 people have agreed positively. It means almost 52% people
are being involved in this business. On the other hand, 24 out of 50 respondents have
disagreed that they are being involved in other business apart from the share market.
Therefore, it can be said that 48% of the rest of the people are doing this business with full of
dedication.
Analysis
While analyzing this data, a remarkable positive side of Indian economy has been explored. It
offers several chances to the people by which they would be enabled to earn more. From the
above findings, this facts has been proved. It shows that a large group of people have
mentioned that they are also involved in other businesses rather than only investing ink share
market. It means they are getting multiple sources of increasing their earnings. On the other
hand, the number of people those are dedicatedly involved in stock market is not at all low.
Therefore, it again proves that from the stock market these people are earning sufficient by
which they can maintain their lifestyles. Improvement in people’s earning is the source on the
other hand to develop the economic scenario of the country. Therefore, by analysing this fact,
it can be said that the financial framework of this country is being developing gradually. By
this question, the researcher wanted to ensure the status of the respondents. Thus, it needs not
to be linked up with the literature review part.
Q4. How long do you have the experience in this business?
Options Responses Total Respondents % of Respondents
More than 10 years 16 50 32%
5 to 10 years 14 50 28%
1 to 5 years 12 50 24%
Less than 1 year 8 50 16%
Table 5: Experiences of the respondents in share market
Mean 2.24
Median 2
Mode 1
Standard
Deviation 1.079682
More than 10
years
5 to 10 years1 to 5 yearsLess than 1 year
0
10
20
30
40
50
60
70
1614
12
8
50
50
50
50Responses
Total Respondents
% of Respondents
Figure 14: Experiences of the respondents in share market
Findings
In response to this question, 16 people (32%) have informed that they are operating business
in this field for more than 16 years. 14 people (28%) have informed that they have 5 to 10
years of experiences in this field. On the other hand, 24% (12) of people have informed that
they are working here for 1 to 5 years. 8 people (16%) were also there those are completely
new there and work less than 1 year.
Analysis
The above mentioned data is again showing that the scenario of Indian stock market is quite
impressive and it is being developing continuously. The findings indicates that 16 people out
of 50 have operating there business for more than 10 years. By this fact it can be easily
assumed that it is a profitable sector and that is why people prefer to stay here in long term.
On the other hand, the 8 people out of 50 have shown interest in this field and that is why
they are willing to invest here. Maybe they are new in this field, but obviously they are
adding a portion of contribution in Indian economy and its development. It is as same to the
previous question. Hence, linking up with the literature has been avoided here too.
Q5. Amongwhich category of investors would you be considered?
Options Responses Total Respondents % of Respondents
Retail 4 50 8%
High Net worth
Individual
10 50 20%
NRIs 12 50 24%
Indian corporate 5 50 10%
Foreign institutions 13 50 26%
Banks, MFs,
Insurance companies
or other financial
institutions
6 50 12%
Table 6: Investment category of the respondents
Mean 3.62
Median 3
Mode 5
Standard
Deviation 1.550378
RetailHigh Net
worth
Individual
NRIsIndian
corporate
Foreign
institutions
Banks, MFs,
Insurance
companies
or other
financial
institutions
0%
20%
40%
60%
80%
100%
41012
5
13
6
505050
50
50
50
20%24%10%26%12%
Responses
Total Respondents
% of Respondents
Figure 14: Investment category of the respondents
Findings
Most of the foreign investments have been noticed here. Thus the number is 13 out of 50. On
the other hand, NRIs are also investing lump sum in this market. therefore, the responses
have become 12. Other than that, high net has been chosen by 10 respondents. Banks,
insurance corporations, mutual funds and other financial organizations have been chosen by 6
respondents. Only 5 people have selected the Indian corporation.
Analysis
While analyzing this data, the researcher has identified that Foreign Institutional Investment
has huge contribution in the stock market of the country. Even, it has also been invested by
the NRI funding as well. Yet, the investors of banks and Indian corporate categories did not
show much interest to join this survey. Though this is also a question related to the present
status of the investors, still this question also provides an idea about the investment sector of
India. Therefore, it can be linked up with the section where the researcher has provided a
brief discussion about the Indian stock market.
Q6. What is the income range you fall in from your investment?
Options Responses Total Respondents % of Respondents
Up to Rs 1 lac 4 50 8%
1 lac 1 Rs to 5 lac 10 50 20%
5 lac 1 Rs to 10 lac 15 50 30%
10 lac 1 Rs to 15 lac 9 50 18%
15 lac 1 Rs to 25 lac 7 50 14%
More than 25 lac 5 50 10%
Table 7: Investment amounts of the respondents
Mean 3.4
Median 3
Mode 3
Standard 1.428571
Deviation
Up to Rs 1
lac
1 lac 1 Rs
to 5 lac
5 lac 1 Rs
to 10 lac
10 lac 1 Rs
to 15 lac
15 lac 1 Rs
to 25 lac
More than
25 lac
0%
20%
40%
60%
80%
100%
4
1015
97
5
50
5050
5050
50
20%30%18%14%10%
Responses
Total Respondents
% of Respondents
Figure 15: Income range of the respondents
Findings
4 people were there those income was not more than 1 lac in India currency. 10 respondents
have disclosed that they earn within Rs 5 lac. 15 people were there those have earned
between 5 lac to 10 lac. 9 respondents have informed that their income is between Rs 10 lac
to Rs 15 lac. 7 respondents’ earning was within Rs. 25 lacs. Besides that, 5 peopel have
earned more than Rs. 5 lac.
Analysis
This amount is reflecting that the investors here are quite successful and they are earning well
enough every year. Therefore, it again proves that the researcher was right that this industry
is continuously growing. In fact this is one of the main reason for what the funds of NRIs or
FIIs are showing so much of interests to invest in this nation. Moreover, by analyzing the
earning rate of the investors, it can be said that the Indian stock market has remarkable
contribution in the development of Indian economy. Other than that, leaving lives by
operating businesses in this field would not be a worthless idea as the investors are getting
full benefit of it. This question has provided an overall view of the present economic scenario
of the country. Even, it touches the stock market to some extent as well. Therefore, this
question should also be linked up with the point of narrating the stock market.
Q7. How far do you agree that enormous changes have been occurred in Indian
economy?
Options Responses Total Respondents % of Respondents
Strongly agreed 15 50 30%%
Agreed 11 50 22%
Neutral 3 50 6%
Disagreed 12 50 24%
Strongly disagreed 9 50 18%
Table 8: Responses about the changes in the economic scenario of India
Mean 2.78
Median 2
Mode 1
Standard
Deviation 1.54246
Strongly agreedAgreedNeutralDisagreed
0%
20%
40%
60%
80%
100%
15
11
3
12
50
50
50
50
22%6%24%
Responses
Total Respondents
% of Respondents
Figure 16: Responses about the changes in the economic scenario of India
Findings
15 out of 50 respondents have strongly agreed that they have identified remarkable changes
in the scenario of Indian economy. Apart from that, 11 respondents have supported them. On
the other hand, this statement was strongly disagreed by 9 people. More 12 people have
informed that they do not find such changes in Indian economy. Rest of 3 respondents have
answered neutrally in this question.
Analysis
While analyzing the fact, the researcher has assumed a situation in support of this answer.
Probably, those respondents who have denied to agree that several changes have been made
in Indian economy, may want to mean that the changes are not adequate or up to mark of
their expectations. However, the validity of the assumption would be ensured later on through
other questions. Before that, it can be said that as per the responses of the positive
respondents a huge change has been occurred in Indian economy. A section is there in the
literature review part of the study where the researcher has discussed about the recent
changes in Indian economy. Therefore, this part can easily be linked up with this section. It
would help the researcher to prove the changes as well.
Q8. How far do you agree that FIIS are responsible for those changes in Indian
economy?
Options Responses Total Respondents % of Respondents
Strongly agreed 16 50 38%
Agreed 11 50 22%
Neutral 2 50 4%
Disagreed 13 50 26%
Strongly disagreed 8 50 16%
Table 9: Responses on the impact of FIIs in these current changes in Indian economy
Mean 2.72
Median 2
Mode 1
Standard
Deviation 1.539149
Strongly
agreed
AgreedNeutralDisagreedStrongly
disagreed
0
10
20
30
40
50
60
16
11
2
13
8
5050505050
22%4%26%16%
Responses
Total Respondents
% of Respondents
Figure 17: Responses on the impact of FIIs in these current changes in Indian economy
Findings
16 people have strongly agreed with the viewpoint that FIIs are mainly responsible for theses
changes in Indian economy. Other 11 people have agreed this point of view as well.
Therefore, almost 60% of people have agreed with the statement. This statement has been
disagreed by 13 people. 8 people have strongly disagreed this statement. Thus, almost 42% of
npeople have disagreed this view. Rest of 2 (4%) people were neutral in this situation.
Analysis
While analyzing this data, the researcher has become more assure that economy of India has
been developed gradually. Therefore, this statement has again proved that the earlier
statement was also correct. It can be possible that the disagreed people are not at all satisfied
with the changes. Similar incident has happened here as well. A group of people have denied
that FIIs have stimulated the changes in Indian economy. In support of this data, the
researcher has assumed two situations. First of all, these people may do not want to give the
credit for these changes to the FIIs. Other than that, secondly, they are those people who are
not at all satisfied with the changes. However, with the support of massive people, it can be
said that FIIs have a huge contribution in the development of Indian economy. From the
above mentioned section of literature review part, the researcher would be able to collect fact
in support to this question.
Q9. How far do you agree that FIIs would really be helpful for Indian economy despite
of all the disadvantages?
Options Responses Total Respondents % of Respondents
Strongly agreed 14 50 28%
Agreed 13 50 26%
Neutral 2 50 4%
Disagreed 10 50 20%
Strongly disagreed 11 50 22%
Table 10: Advantages of FIIs in Indian economy
Mean 2.82
Median 2
Mode 1
Standard
Deviation 1.573894
Strongly
agreed
AgreedNeutralDisagreedStrongly
disagreed
0%
20%
40%
60%
80%
100%
1413
2
1011
5050
50
5050
26%4%20%22%
Responses
Total Respondents
% of Respondents
Figure 18: Advantages of FIIs in Indian economy
Findings
14 people have strongly agreed that in spite of such disadvantages FIIs is helping the Indian
economy in its betterment. This statement has again being supported by other 13 people out
of 50. 10 people have disagreed the statement, whereas 11 respondents have completely
denied this point of view. 2 people have chosen the option ‘neutral’ here.
Analysis
This question is also similar to the above two questions. Therefore, it can be said easily that
the Indian economy is growing and FIIs is responsible for that. This is true that some
disadvantages are also there in this system. Still it is helpful and suitable for the economic
scenarios of developing countries like India. This question would be linked up where the
researcher has discussed the advantages and disadvantages of FIIs in literature review.
Q10. Based on the earlier questions, how far do you agree that FIIs are ultimate way to
improve the financial scenario of developing countries like India?
Options Responses Total Respondents % of Respondents
Strongly agreed 15 50 30%
Agreed 12 50 24%
Neutral 3 50 6%
Disagreed 9 50 18%
Strongly disagreed 11 50 22%
Table 11: Influence of FIIs in the economic development of India
Mean 2.78
Median 2
Mode 1
Standard
Deviation 1.581655
Strongly
agreed
AgreedNeutralDisagreedStrongly
disagreed
0%
20%
40%
60%
80%
100%
1512
3
911
5050
50
5050
Responses
Total Respondents
% of Respondents
Figure 19: Influence of FIIs in the economic development of India
Findings
15 out of 50 respondents have strongly agreed that FIIs is the ultimate way that can improve
the economic scenario of India. Therefore, 30% of the respondents have chosen this
viewpoint. In addition, more 12 people have also supported this statement. It seems more
24% of people also believe that fact. Other than that, 9 people have completely disagreed this
statement, whereas 11 people have strongly denied that. Therefore, the ratio has stood by
18% and 22% respectively. 3 people have chosen the ‘neutral’ option while responding in
this question.
Analysis
The researcher has also agreed that several loopholes can be found in the system of FIIS. In
spite of such flaws, this system is appropriate and mostly needed for the development of
country’s economy. However, while analyzing all these data, one thing has been noticed that
all of them are indicating two facts. One of them is about the development of Indian economy
and the second one is about to the involvement of FIIs in the development of Indian
economy. In literature review part, the researcher has discussed about the importance and
impact of FIIs on Indian stock market. This question should be linked up with that part of the
dissertation.
4.3 Qualitative Data Analysis (for 2 managers of SEBI)
Qualitative analysis has been dedicated to analyze the opinions of the managers from the
Security and Exchange Board of India (SEBI). The researcher has chosen two managers from
SEBI. This organization is responsible to protect the interest of investors as well as to ensure
the development of them too. That is why, the researcher has decided to involve the managers
of SEBI in this project for getting appropriate as well as authentic information in this regard.
These responses were also collected from the interested respondents only.
The researcher has assured that these managers were not being forced anyhow. The
researcher has conducted a telephonic interview with each of the managers in their
convenient times. Apart from that, no personal questions have been asked to the mangers.
Most importantly, the researcher has not asked any confidential questions related to the
organization. The answers of the questions have been documented in MS word file. Five
questions have been asked to the managers and while describing as well as analyzing their
answers, some statements of them have been quoted. It increases the authenticity of the
project. Even, while analyzing the part it has also been linked up with the literature review
part of the dissertation.
Q1. What is the impact of FIIS on the current Indian economy?
The first manager has opined that “this is not about India, international capital is always
beneficial for all the nations”. It adds an extra advantage to the economy of the country. The
manager has added that “let’s look at the developed nations. They are being benefitted with
the foreign money which have been earned by the tourism part. Yes, if it is being
considered for the developing countries such as India, therefore, foreign investment
matters is a separate way and the foreign investors are investing here constantly.”The
person has again added that India has a sound macroeconomic framework as well as it is a
well-functioning institutions, therefore it is the best option for reaping the foreign investment
for minimizing the challenges in current economy.
The second manager has supportably said that the countries those permits the flow of free
capital, they should choose the stability providing by the fixed exchange rate or the flexibility
which has been afforded by the independent monetary policy. The person has stated that “the
flow of international capital has been noticeably increased since 1980s Even, it has been
improved in 1990s.”It seems thatthe flow of international capital is increasing day by day.
The second manger has also added that the sector of debt and equity market is mostly
responsible for this growth in trade.
The researcher has realized that the integration of equity as well as debt markets should be
accompanied by large capitals in a short time of period. Basically, this time is needed for the
investors as they could be able to reallocated the portfolios of them towards foreign equity as
well as debt. It is very clear to the researcher that the prolonged increment in volatility as well
as the size of the capital flows have been observed for adjusting with the greater economic
integration. This question can be easily linked up with the part in literature review where the
researcher has discussed about the impact of FIIS on Indian stock market.
Q2. According to you, how FIIs has influenced Indian stock market?
This question has only been asked to the second manager. Thus, the manager has stated that
“Indian stock market has a special capacity that it can attract the investors. That is why the
Indian market is going steadily and attracting the domestic investors continuously.” The
researcher has come to know that the institutional investors are the most important part in
Indian economy. Therefore, the researcher has come to an assumption. Until now, it has been
showed that foreign investment is highly appreciated in Indian economy as it has remarkable
importance. This fact has been accompanied by the importance of institutional investment.
Therefore, it can easily be understood that the foreign institutional investors are how much
important in the stock market of India.
Rather it is better to say that these investors are important in the overall economic framework
of India as well. This assumption has been sealed up when the second manager has opined
that “FII is the most vital factor for any developing economy as it has a greater impact on
the domestic economic market.” Though it should be remember that this is a short term
impact. However, the real impact would be gained in long run as well.
The globalization as well as the liberal financial policies have changed the economic scenario
of emerging states. Thus, gradually, the Indian market has become the focus point for the
foreign investors. For linking up of this question with the literature review part, the researcher
would suggest the points where the overview of the Indian stock market has been given and
the point where the effects of FIIs have been discussed. By analyzing this question, the
researcher has realized that foreign investment is a modern way of investment and it is
enormously profitable for the emerging states like India.
Q3. Do you think that Foreign Institutional Investment would really help the economic
scenario of India despite of such disadvantages?
The loopholes of FIIS have already been identified as well as discussed in the literature
review part of this research paper. In the response of this question, the researcher would get
the supportive materials of the assumption that has been developed first in the quantitative
analysis. FII has several flaws, but despite of that it helps in the betterment of Indian
economy. Here, both the managers have agreed with that viewpoint. The loopholes of FIIs
seem to be the probability to create problem in inflation, small investors would not be so
much benefitted by it, exports would be affected by negative impact as well as the issue of
hot money. Therefore, this question can easily be linked up with the section in the literature
review where the researcher has discussed about the advantages and disadvantages of FIIs. In
addition, the section where the effect of FIIs have been discussed, it also can be linked up
with it.
Both the managers have discussed that these flaws are very minimal in front of the huge
advantages of FIIs. The first manager has stated that “the main intention of FII is to gain the
capital.”The person has produces an example in support of the answer that if the global
depository receipt (GDR) has been bought by FII or any other instrument that has been used
by the non-citizen of the country of an authentic business at US$90, after sometime the share
price would touch US$150. Therefore, the person can sale that share immediately for gaining
more capital.
The first manager in this regard has added that “FII leads the appreciation of the currency
as well.” All the foreign investors need to create as well as regularly maintain an account in
Reserve Bank of India. All the transactions need to be documented there. It needs to be
understood the appreciation or the depreciation of Indian currency against other currencies.
Q4. What issues are there in India those have been faced by FII while investing in stock
market of the country?
The first manager in response to this question has stated that the Indian economy deals with
some regular challenges and being a part of this economy FIIs should also avoid them and
carry on the activities. According to the person, “sometimes these challenges discourage the
investors to invest in this country.” The second manager has added that “even after the
reformation of domestic market, all the challenges have not been overcome.” Both the long
term as well as short term factors are equally responsible to stimulate the financial sector of
India.
The first manager has said that “some challenges are still there which needs to be addressed
very soon.” The researcher has realized that after recovering these flaws, there are high
chances to become the avenue of productive channelization for the savings of domestic
investors. Even, it would be more preferable destination for the international investors as
well. The managers have informed that last year this country has taken the position among
top market performers. The measurement was based on the market efficiency, process of
price discovery as well as transparency. Therefore, it can be said that this market has n
enormous potential to achieve the highest position. On the other hand, this answer would be
linked up with the section where the researcher has discussed about the overview of Indian
economy in literature review part.
Q5. What ways can be chosen foe getting a smooth investment in Indian stock market
by FIIS?
This question has been asked to the first manager only. Thus, the person has stated that
“India needs a better infrastructure.” The researcher has also realized that better framework
is needed for the economic scenario and other sector as well. Yet, the researcher has
concentrate on the financial scenario only. For a perfect solution of this situation government
initiative is needed. The government should identify the areas where development is needed.
If needed, the involvement of private sector is also being appreciable. Thus, the corporate
investments need to be maximized. The researcher has also agreed with this statement as in
the quantitative part it has been noticed that the investment from the corporate sectors is too
minimal.
The manager has again suggested that “a distributed model of economic framework is
highly needed.” It may help in accounting the large projects. However, the researcher has
noticed that the banks as well as the private sectors need to invest more in Indian economic
framework. This is true that a large amount of NRI funding and FIIs have been collected
here. Still a huge gap is there. It is because of those challenges which have been noticed by
the researcher as well. This question would also be linked up with the literature review
chapter. Basically no such point can be mentioned here as the conception of this point has
been gathered from the overall section as well. The first manager has provided special
emphasized on the implementation of strategies those can reduce the challenges. According
to the manager, “the international investors may stop investing due to these challenges.”
4.4 Summary
This chapter has focused on the discussion part of the overall project. It is being known as
highly important part of the project. The researcher has added both the quantitative as well as
qualitative data analysis here. All the questions have been linked up properly with the
literature review part. It has enhanced the authenticity of the project. Even, the qualitative
data have also been linked up with that. While analyzing the data, some loopholes of FIIs
have been identified and the managers of SEBI has suggested some suitable
recommendations for that as well. By analyzing the data it can be ensured that FIIs provide
great opportunity to the country for its economic development.
Due to the fast changing economic policies, the financial scenario in India has changed
remarkably. Several investors have started showing interests in it. Thus, it is the high time for
the country to remove the loopholes and to ease the way of success for the country. For that,
the government needs to take more initiatives. Otherwise high chances are there to loss the
foreign investments. It is quite difficult for the foreign investors to face the challenges,
remove them and then invest in the country. This is true that these investments would be
profitable for them as well. Still, India should prepare the economic structure more firmly and
steadily as well.
Chapter 5: Conclusion and Recommendations
5.1 Conclusion
After the completion of the overall project, the researcher is needed to conclude the study.
Thus, this is the part where the conclusion would be made. After analyzing all the data it can
be said that Foreign Institutional Investments are facilitating the economy of India by
involving several international investors here. However, in spite of such advantages some
flaws are also there in FII. Thus, the capitalists in India have decided to avoid the loopholes
and to appreciate FIIs. The researcher has come to know that foreign investment profitable
for both the developed as well as developing countries. Therefore, India would be highly
benefitted while the foreign investors would invest in its businesses.
The overall research has been divided into five separate chapters and each of the chapters
have their own importance to make the project perfect. In the introductory part, the researcher
has discussed about the overall project. The second part is all about to discuss the earlier facts
and theories related to the topic of Foreign Institutional Investment. In this chapter the basic
concept of Indian stock market as well as the FII have been discussed elaborately. In
addition, the researcher has discussed about its effects and positive and negative sites too.
The third chapter has shown the methodological part of the study. It has helped the researcher
to understand in which way the study should be continued. IT provides the suggestion of
selecting proper research philosophy, approach and design as well. In the next part of the
project the researcher has discussed about the data and analyze them properly. It has provided
the knowledge of current situation related to Indian stock market as well as FIIs.
5.2 Linking with Objectives
It is quite obvious that the researcher should compose the questionnaire based on the research
objectives. Each chapter of the dissertation should be linked up with each other. Research
objectives refers to the fact for which the project has been conducted mainly. These
objectives need to be related to the literature review part as well. In this part of the project,
the researcher needs to link up the objectives with both the literature review and data analysis
parts. Four objectives of the project have been mentioned as follows:
Objective 1:
To critically evaluate the impact of FIIs in Indian economy and Stock Market
With the help of this objective, the researcher has aimed to know about the impact of FIIs on
the overall economy of India and the stock market. This objective has been derived by three
points in literature review where the researcher has discussed about the overview of Indian
stock market, Indian economy and of course the effect of FIIs. On the other hand, the
researcher has asked the respondents about the current changes in Indian economy as well as
the role of FIIs in these changes as well. Therefore, the quantitative question number 8,9
and 10 would be linked up with the objective.In the qualitative part, question 1 and 2 would
be linked up with this objective.
Objective 2:
To determine the issues faced by FIIs while investing in Indian Stock Market
This objective would be linked up with the part of literature review, where the researcher has
discussed about the advantages and disadvantages of FIIs. On the other hand, quantitative
question 9 and the qualitative questions 3, 4 and 5 would be almost related.
To assess the effectiveness of Indian Stock Market in respect to FIIs
This objective has been derived from the part where the researcher has discussed about the
overview of Indian stock market and the effect of FIIs in Indian economy. Besides that, the
quantitative questions 5,6 and 7 would be considered in this regard. In the qualitative part
question 1 and 2 should be linked up with it.
To recommend some ways by which the Indian Stock Market support FIIs
This is the recommendation part. It should only be linked up with the qualitative question 5
directly. Other than that, it can be said that the researcher has gathered the overall concept
from the entire literature review part and by analyzing all ten quantitative and qualitative
data.
5.3 Limitation of the Study
Though the researcher has conducted this project by following all the required ways and
collected the data by maintaining its authenticity. In spite of that, some limitations are there
in the project. First of all, the researcher is a student, thus it is not possible to access all the
libraries and other sources. Therefore, the researcher has to complete this project only by
consulting with limited secondary sources. Other than that, for being a student the researcher
was not reliable to many. The managers of SEBI were not ready to entertain the researcher.
However, lots of efforts have to give there to convince them. Even, they do not disclose any
crucial fact as well.
Other than that, the researcher had very short time in hand. It is expected that more time may
allow the researcher to consider data from other places as well. Yet, the researcher was bound
to complete the project by collecting information from a limited number of people only.
Besides that, money was a big factor here. The researcher had not sufficient money for
continue the research in long term. Therefore, all of them have created issues for the
researcher while conducting this project. Hence, these limitations may provide opportunities
for the future researchers.
5.4 Future Scope of the Research
After analyzing the limitation of this research, it can be said that any interested researcher can
continue this project in future or may conduct a new project based on this. This project has
been composed based on the respondents of a particular area. Therefore, the future
researchers can choose another place and it may generate a differentiation in the result.
However, for that the future researcher should try to allot some more money as the present
researcher has already faced this issue. On the other hand, the researcher has developed this
project based on India. The future researcher may concentrate on other emerging state as
well.
The result can be varied here also. The foreign investors may interested to invest in other
markets as well. Yet, the future researcher has an option to research on this and to generate an
authentic result. Besides that, only 2 managers from SEBI have been chosen by the researcher
for this study. The future project would involve more managers and thus the result could be
varied too. The opinions of other mangers may be different from the chosen managers and
thus the result of research would be changed as well. Therefore, the future researchers should
chalk out earlier before conducting the project.
5.5 Recommendations
After analyzing all the data, the researcher has identified some issues those need to be sorted
out immediately. Based on them, the researcher has developed some recommendations. In
addition, the researcher has added proper justification for developing each of the
recommendation.
Recommendations 1:
Government initiatives are needed to reduce the challenges faced by FIIs while
investing in India
Justification for the recommendation
The researcher has identified that several loopholes are there and the foreign investors have to
face several issues while investing in the country. The researcher has realized that these
challenges may discourage the investors for proper investments. Therefore, the country
should be suffered. That is why, reduction of these challenges is needed. Government can
take a strict step in this regard. That is why, the government initiative has been suggested.
Recommendations 2:
Restrictions in capital inflow is highly necessary
Justification for the recommendation
Facilitating the outflows of capital have some advantages associated to the compensation of
temporary higher capital inflows. It should be induced by the measures of capital
linearization. It needs proper macroeconomic policies.
Recommendations 3:
Better infrastructure needs to be created to attract more investors
Justification for the recommendation
For availing the full benefit of FIIs, it is highly needed to reframe the financial and business
structure of the country. Other than that, the political issues need to be avoided and a friendly
atmosphere should be expanded. It may help to attract more foreign investors.
References
Agarwal, B., 2016. FII Inflows into Indian IPOs and its Impact on the Indian Stock
Market. Emerging Economy Studies, 2(1), pp.129-144.
Agrawal, A.N., 2015. Indian economy. New Age International Pvt.`
Ahluwalia, I.J. and Little, I.M.D., 2012. India's economic reforms and development: Essays
for Manmohan Singh. Oxford University Press.
Ahmad, A., Zhao, Y., Shahbaz, M., Bano, S., Zhang, Z., Wang, S. and Liu, Y., 2016. Carbon
emissions, energy consumption and economic growth: An aggregate and disaggregate
analysis of the Indian economy. Energy Policy, 96, pp.131-143.
Ahmad, I. and Khan, N., 2017. Demonetization and Indian Economy. Asian Journal of
Research in Banking and Finance, 7(8), pp.60-75.
Bauer, G.R., 2014. Incorporating intersectionality theory into population health research
methodology: challenges and the potential to advance health equity. Social Science &
Medicine, 110, pp.10-17.
Binswanger-Mkhize, H.P., 2013. The stunted structural transformation of the Indian
economy. Economic and Political weekly, 48(26-27), pp.5-13.
Boutabba, M.A., 2014. The impact of financial development, income, energy and trade on
carbon emissions: evidence from the Indian economy. Economic Modelling, 40, pp.33-41.
Buchanan, B.G., Le, Q.V. and Rishi, M., 2012. Foreign direct investment and institutional
quality: Some empirical evidence. International Review of Financial Analysis, 21, pp.81-89.
Chen, R., El Ghoul, S., Guedhami, O. and Wang, H., 2017. Do state and foreign ownership
affect investment efficiency? Evidence from privatizations. Journal of Corporate
Finance, 42, pp.408-421.
Cnossen, S., 2012. Introducing a modern GST in India: need for further debate. Tax Notes
International, 66(13), pp.1267-83.
Dhingra, V.S., Gandhi, S. and Bulsara, H.P., 2016. Foreign institutional investments in India:
An empirical analysis of dynamic interactions with stock market return and volatility. IIMB
Management Review, 28(4), pp.212-224.
Ferreira, M.A., Matos, P., Pereira, J.P. and Pires, P., 2017. Do Locals Know Better? A
Comparison of the Performance of Local and Foreign Institutional Investors. Journal of
Banking & Finance.
Garg, G., 2014. Basic Concepts and Features of Good and Service Tax in India. International
Journal of scientific research and management (IJSRM), 2(2), pp.542-549.
Goldar, B. and Goldar, B., 2016. Manufacturing growth in India in recent years: Is it getting
overstated in India’s new GDP series?. Indian Growth and Development Review, 9(2),
pp.102-113.
Hiremath, G.S. and Kattuman, P., 2017. Foreign portfolio flows and emerging stock market:
Is the midnight bell ringing in India?. Research in International Business and Finance.
Hudson.org. (2017). Hudson Institute. [online] Available at: https://www.hudson.org
[Accessed 21 Sep. 2017].
Humphries, B., 2017. Re-thinking social research: anti-discriminatory approaches in
research methodology. Taylor & Francis.
Ibef.org. (2017). Business Opportunities in India: Investment Ideas, Industry Research,
Reports | IBEF. [online] Available at: https://www.ibef.org [Accessed 21 Sep. 2017].
Jalota, S., 2017. FII and DII in Indian Stock Market: A Behavioural Study. International
Journal of Research in Finance and Marketing, 7(5), pp.20-28.
Kao, H.Y., Yu, M.C., Masud, M., Wu, W.H., Chen, L.J. and Wu, Y.C.J., 2016. Design and
evaluation of hospital-based business intelligence system (HBIS): A foundation for design
science research methodology. Computers in Human Behavior, 62, pp.495-505.
Kumar, S.S.S., 2017. Institutional Investors and the Indian Stock Market.
Kumaraswamy, A., Mudambi, R., Saranga, H. and Tripathy, A., 2012. Catch-up strategies in
the Indian auto components industry: Domestic firms’ responses to market
liberalization. Journal of International Business Studies, 43(4), pp.368-395.
Kurinczuk, J.J., Linsell, L., Malouf, R., Marlow, N. and Morris, J., 2016. Risk factor models
for neurodevelopmental outcome in children born very preterm or with very low birth weight:
a systematic review of methodology and reporting. American Journal of Epidemiology.
Lin, J.Y., Wan, G. and Morgan, P.J., 2016. Prospects for a re-acceleration of economic
growth in the PRC. Journal of Comparative Economics, 44(4), pp.842-853.
Lindberg, C. and Jütting, J., 2016. Gender, Globalisation and Economic Development in
Asia. Border Crossings: Grenzverschiebungen und Grenzüberschreitungen in einer
globalisierten Welt, 42, p.135.
Luong, H., Moshirian, F., Nguyen, L., Tian, X. and Zhang, B., 2017. How Do Foreign
Institutional Investors Enhance Firm Innovation?. Journal of Financial and Quantitative
Analysis, 52(4), pp.1449-1490.
Mackey, A. and Gass, S.M., 2015. Second language research: Methodology and design.
Routledge.
Malhotra, A.K. and Chauhan, A.K., 2017. Does time-varying residual conditional
heteroscedasticity in index returns affect trading behaviour of institutional investors in Indian
Stock Market?. International Journal of Accounting and Finance, 7(2), pp.127-140.
Marais, H.C. and Pienaar-Marais, M., 2016, June. Analysis of Research Methodology in
Business and Management Studies as Reflected in the ECRM 2015 Proceedings. In European
Conference on Research Methodology for Business and Management Studies (p. 167).
Academic Conferences International Limited.
Mishra, P. and Zaveri, F., 2017. A project report on analysis of FII investment in Indian
market (Doctoral dissertation, Indian Institute of Management Bangalore).
Mishra, P. and Zaveri, F., 2017. A project report on analysis of FII investment in Indian
market (Doctoral dissertation, Indian Institute of Management Bangalore).
Mohanasundaram, T. and Karthikeyan, P., 2017. Decisive Economic and Stock Market
Indicators on Foreign Institutional Investments: Evidence from India. Journal of Applied
Management and Investments, 6(1), pp.43-57.
Nagaraj, R. and SAN, T., 2017, August. Measuring India’s GDP Growth: Unpacking the
Analytics and Data Issues behind a Controversy That Has Refused to Go Away. In India
Policy Forum 2016–17 (Vol. 13, p. 73). SAGE Publications India.
Panneerselvam, R., 2014. Research methodology. PHI Learning Pvt. Ltd..
Patino, C.M., Au, D.H., Lane, C.J., Buist, A.S. and Vollmer, W.M., 2016. Building Research
Capacity In Middle And Low-Income Countries Through Research Methodology And Career
Development Education. In D102. Figuring Out What We Don't Know: Advances In Medical
Education (pp. A7567-A7567). American Thoracic Society.
Sehrawat, M. and Dhanda, U., 2015. GST in India: A key tax reform. International Journal
of Research-Granthaalayah, 3(12), pp.133-141.
Selvam, J.D. and Raman, R., 2017. FII and Its Impact on Exchange Rate in India. Asian
Journal of Research in Banking and Finance, 7(1), pp.1-27.
Silverman, D. ed., 2016. Qualitative research. Sage.
Silverman, D. ed., 2016. Qualitative research. Sage.
Sinha, P.C., 2017. Demonetization of Indian Economy: Philosophical Critics.
Sinha, S., 2017. A Study Of The Impact Of Foreign Institutional Investors On The Indian
Stock Market With Special Reference To Bse Returns. Primax International Journal of
Finance (PIJF).
Smith, J.A. ed., 2015. Qualitative psychology: A practical guide to research methods. Sage.
Solomon, P. and Aggarwal, M.T., 2017. Trends and Patterns of FDI and FII in India-
Implications for the Future. Global Journal of Management And Business Research.
Srikanth, M. and Kishore, B., 2012. Net FII flows into India: A cause and effect study. ASCI
Journal of management, 41(2), pp.107-120.
Srinivas, V.A., 2016. Indian Capital Market-Impact of FII on Indian Stock Market. Indian
Journal of Science and Technology, 9(15).
Talib, F., Rahman, Z. and Qureshi, M.N., 2012. Total quality management in service sector: a
literature review. International Journal of Business Innovation and Research, 6(3), pp.259-
301.
Taylor, S.J., Bogdan, R. and DeVault, M., 2015. Introduction to qualitative research
methods: A guidebook and resource. John Wiley & Sons.
Tuohy, D., Cooney, A., Dowling, M., Murphy, K. and Sixsmith, J., 2013. An overview of
interpretive phenomenology as a research methodology. Nurse Researcher, 20(6), pp.17-20.
Vaioleti, T.M., 2016. Talanoa research methodology: A developing position on Pacific
research. Waikato Journal of Education, 12(1).
Vardhan, H. and Sinha, P., 2016. Influence of Foreign Institutional Investments (FIIs) on the
Indian Stock Market: An Insight by VAR Models. Journal of Emerging Market
Finance, 15(1), pp.49-83.
Wiek, A. and Lang, D.J., 2016. Transformational sustainability research methodology.
In Sustainability Science (pp. 31-41). Springer Netherlands.
Appendices
Appendix 1: Quantitative questionnaires
Q1. What is your gender?
Q2. Which age group do you belong to?
Q3. Are you involved in other business except the sharing brokering?
Q4. How long do you have the experience in this business?
Q5. Among which category of investors would you be considered?
Q6. What is the income range you fall in from your investment?
Q7. How far do you agree that enormous changes have been occurred in Indian economy?
Q8. How far do you agree that FIIS are responsible for those changes in Indian economy?
Q9. How far do you agree that FIIs would really be helpful for Indian economy despite of all
the disadvantages?
Q10. Based on the earlier questions, how far do you agree that FIIs are ultimate way to
improve the financial scenario of developing countries like India?
Appendix 2: Qualitative questionnaire
Q1. What is the impact of FIIS on the current Indian economy?
Q2. According to you, how FIIs has influenced Indian stock market?
Q3. Do you think that Foreign Institutional Investment would really help the economic
scenario of India despite of such disadvantages?
Q4. What issues are there in India those have been faced by FII while investing in stock
market of the country?
Q5. What ways can be chosen foe getting a smooth investment in Indian stock market by
FIIS?