IMPACT OF FOREIGN DIRECT INVESTMENTS (FDIS) AND FOREIGN INSTITUTIONAL INVESTMENT (FIIS) ON STOCK INDICES RETURNS OF INDIAN STOCK MARKET

This paper investigates the causal relationship between the inflow of Foreign Direct Investments (FDIs) and Foreign Institutional Investments (FIIs) and stock indices returns of India. The present study employed the data of FDIs and FIIs inflow and daily returns of BSE Sensex and NSE CNX Nifty index. Statistical tools like Descriptive Statistics, Unit Root, Correlation Matrix, OLS regression Test and GrangerCausality Test were employed.This study found that FIIs did have significant and positive impact on the returns of BSE Sensex and NSE CNX Nifty whereas, FDI inflows exerted negative impact on the returns of BSE Sensex and NSE CNX Nifty during the study period.This study found that apart from the FDI & FII inflows, many other macro-economic factors also affected the stock indices returns.The findings of this study would help the retail investors in making investment decision rationally, based on inflow of FDIs and FFIIs.