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Introduction
FII is when a foreign co. buys equity in a company through " markets the stock
Attracted towards Indian equity.

Agencies Regulating FII in India:

RBI FIPB: - Reviews all foreign Investment proposals. SEBI: - which regulates Indias capital
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Financial instruments available for FII investments

Securities
Units of mutual funds Dated Government Securities Derivatives Commercial papers
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P- NOTES/OFF-SHORE DERIVATIVES
Used to trade in Indian

markets

Through brokerage houses

The brokerage houses then

repatriate the dividends and capital gains back to these entities.

They keep the investors

name anonymous

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Investment limits
no more than 10% of the equity in any one company

no more than 10% in the equity in any one company on

behalf of a fund sub-account

no more than 5% in the equity in any one company on behalf

of a corporate/individual sub-account

no more than 24% in the aggregate of the total issued capital

of a company to be held by FIIs

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Areas affected by FII

Stock Market
Exchange Rates Exports & Imports Inflation

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ADVANTAGES
Enhanced flows of equity capital
Improving capital markets Trading & delivery volume raises Volatility will be curtailed

More liquidity will be created

Standard will be improved
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DISADVANTAGES
Problems of inflation
Hot money

False representation of economy

Cannot be utilized for long term

Problem for small investor

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FDI V/S FII

Brings capital into a country

for production or some other facility.

Buys equity in a company

through the stock markets

Direct production activity &

also of medium to long term nature.

Short term investments

mostly in the financial markets

A degree of control in the

company.

No degree of control in a

company.

Long term capital

Short term capital

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Influence of FIIs on Indian Stock Market

"FIIs Fuel the Market Run".

Increase depth and breadth of the market. Major role in expanding securities business.

Efficient pricing of shares.

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TRENDS IN FIIS

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YEARWISE TRENDS IN FIIS

GROSS PURCHASES & GROSS SALES
40000 35000 30000 25000 20000 15000 10000 5000 0

93

94

95

96

97

98

99 19

19

19

19

19

19

19

YEAR GROSS PURCHASES RS.CRORES GROSS SALES RS. CRORES

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20

00

NET INVESTMENTS 1993-2000

12000 10000 8000 6000 4000 2595.2 2000 0 1 2 3 4 5 6 7 8
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10803.6

6791.5 5637 3853.5

6668.1 6317.3

739.8 1993 1994 1995 1996 1997 1998 1999 2000

2008(10/08/08) 2007 2006

560480.9 814877 475622.5

589650 743390.7 439082.8 238839.4

2005 286020.5

2004185671.5 146706.4 2003 94410.5 0

63951.8

500000

1000000

1500000

2000000

gross purchases RS.CRORES

GROSS SALES RS.CRORES Page 14

% CHANGE IN INVETSMENTS
100000 50000 0 -50000 2003 2004 2005 2006 2007

2008(10 /08/08)

NET IVESTMENTS 30458.7 38965.1 47181.2 36539.7 71486.5 -29169 % CHANGE 0 27.9277 54.9022 19.9647 134.7 NET IVESTMENTS -195.77

% CHANGE

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Page 16

NET INVESTMENTS JAN JUL 09

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Page 18

 FII holding is estimated at close to $100 billion

Gross purchases Rs 2,846.60 crore and gross sales

Rs 2,586.60 crore.
Total of 1675 foreign funds registered with the Securities &

Exchange Board of India (Sebi).

FII inflows of US$ 7 billion since March 2009 have helped the

rupee climb about 10.5 per cent to 47.24/25 per dollar from its low of 52.2 recorded therein
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BUDGET IMPACT ON FIIs

No permission to invest in commodity derivatives.

Public float of listed company

Zero coupon bonds

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Conclusion
There is a direct relation between the FII's money flow and

the movement of sensex.

The present condition FII inflow in July 2009 totaled Rs 5,668

crore (till 17 July 2009). FIIs had bought stocks worth a net Rs 3,224.90 crore in June 2009. FII inflow in calendar year 2009 totaled Rs 30,212.20 crore (till 17 July 2009).

In the January-March 2009 quarter, FII interest in major

cement manufacturers has also increased

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