Impact of Mutual Fund and Foreign Institutional Investment on Stock Market Performance and Volatility in India (2005–2026)

The Indian stock market has witnessed a significant transformation since the mid-2000s, driven largely by the growing participation of Mutual Funds (MFs) and Foreign Institutional Investors (FIIs). This study examines the impact of MF and FII investment flows on stock market performance and volatility in India over the period 2005–2026. Using secondary data from the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), National Stock Exchange (NSE), and Bombay Stock Exchange (BSE), the study employs econometric techniques including unit root tests, correlation analysis, multiple regression models, and volatility modelling. The findings indicate that FII flows exert a stronger influence on short-term market movements and volatility, whereas mutual fund investments contribute to market stability and long-term growth. The study offers valuable insights for policymakers, regulators, and investors regarding capital flow management and market resilience in emerging economies.

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Publication Details

Journal
Zenodo (CERN European Organization for Nuclear Research)
Published
2026-01-30
DOI
https://doi.org/10.5281/zenodo.18426271
Primary Topic
Financial Markets and Investment Strategies
Type
article
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article

Impact of Mutual Fund and Foreign Institutional Investment on Stock Market Performance and Volatility in India (2005–2026)

Pranav Singh
Zenodo (CERN European Organization for Nuclear Research)
Financial Markets and Investment Strategies
article

Impact of Mutual Fund and Foreign Institutional Investment on Stock Market Performance and Volatility in India (2005–2026)

Pranav Singh
article en

Abstract

The Indian stock market has witnessed a significant transformation since the mid-2000s, driven largely by the growing participation of Mutual Funds (MFs) and Foreign Institutional Investors (FIIs). This study examines the impact of MF and FII investment flows on stock market performance and volatility in India over the period 2005–2026. Using secondary data from the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), National Stock Exchange (NSE), and Bombay Stock Exchange (BSE), the study employs econometric techniques including unit root tests, correlation analysis, multiple regression models, and volatility modelling. The findings indicate that FII flows exert a stronger influence on short-term market movements and volatility, whereas mutual fund investments contribute to market stability and long-term growth. The study offers valuable insights for policymakers, regulators, and investors regarding capital flow management and market resilience in emerging economies.

Zenodo (CERN European Organization for Nuclear Research)
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