An Impact Of Foreign Institutional Investment On Share Price Of Selected Indian Companies

Abstract

Economic policies liberalization in 1992 permitted foreign institutional investors (FIIs) to invest in Indian capital markets. Still, FIIs actually began investing in India from 1997 onwards. Moreover, the investment by FIIs saw factual growth only after 2002. Since then, the participation of FIIs in Indian stock market has risen steadily. Having emerged as one of the largest investors, FIIs have acquired non-promoter shares ownership of a substantial proportion. Becoming dominant market players in the Indian stock market, FIIs contribute a considerable proportion (41.73%) of the total stock exchange turnover of BSE and NSE put together. In the Indian markets, FIIs are seen as large and sophisticated investors having a considerable impact on stock market returns. A number of investors and market participants steer their stock market strategy in accordance with FII s investment pattern. They also base their stock market analysis on their perception pertaining to the factors considered by FII in their investment decision. newlineObjective of this study is to examine the impact of shareholding pattern of FII on share prices movement of selected super companies of India, to examine the relationship between shareholding pattern of FIIs and share prices of the selected companies and to study the trend of share prices and FIIs in shareholding patterns. In this study, researcher has taken 47 companies from the FORBES 50 companies of the year 2018. Top 47 super companies have been selected by further evaluation on a three different set of parameters of a three-year period, sales growth (three-year CAGR), return on equity (three-year average) and return on shareholders fund (three-year average). Last 11 years 2010 to 2020 of FII shareholding data and share prices data has been taken for this study. Quarterly data from the year March 2010 to March 2020 has been covered in this study. For this study, researcher has used Regression to analyse the impact of shareholdings pattern of FII on share price movement.