A STUDY ON FOREIGN INSTITUTIONAL INVESTMENTS IN

INDIAN MARKET

Dissertation Submitted in partial fulfillment of the requirements for the award of

the Degree

MASTER OF BUSINESS ADMINISTRATION

OF

BANGALORE UNIVERSTY

BY

USHA RANI.R

Register no

05JJCM6057

Under the Guidance of

Dr. Justin Nelson Michael

(Faculty Guide)

KRISTU JAYANTI COLLEGE OF MANAGEMENT & TECHNOLOGY

Bangalore – 560077

2007

1

CERTIFICATE FROM GUIDE AND HEAD OF THE INSTITUTION

Certified that this dissertation entitled “Foreign Institutional Investments in Indian

Markets”, submitted in partial fulfillment for the award of MBA Degree of

Bangalore University was carried out by Ms.Usha rani.R under the guidance of

Prof.Dr.JustinNelson Michael

This has not been submitted to any other University or Institution for the award of

any degree /diploma/certificate.

GUIDE DEAN

MBA DEPARTMENT

PRINCIPAL

2

STUDENT’S DECLARATION

I hereby declare that this dissertation titled Foreign Intuitional Investments

in Indian Markets submitted by me to the department of management, Bangalore

University in partial fulfillment of the requirements of MBA programme is a

bonafide work carried by me under the guidance of Prof . .Dr.Justin Nelson

Michael. This has not been submitted earlier to any other university or institution

for the award of any degree, diploma/ certificate or published any time before.

USHA RANI.R

EXECUTIVE SUMMARY

3

Foreign institutional investors in Indian market is the topic which I have been

selected because I want to do some thing new and interesting

FII’s seem to have been following a hedging strategy with simultaneous

Investments in cash and derivatives market.

Foreign investment – both portfolio and direct varieties – can supplement

domestic savings and augment domestic investment without increasing the

foreign debt of the country.

Such investment constitutes non-debt creating financing instruments for the

current account deficits in the external balance of payments. Capital inflows into

the equity market give higher stock prices, lower cost of equity capital, and

encourage investment by Indian firms.

Foreign institutional investors (FII’s) were net sellers from November 1997

through January 1998. The outflow, prompted by the economic and currency

crisis in Asia and some volatility in the Indian rupee, was modest compared to

the roughly dols 9 billion which has been invested in India by FII’s since 1992.

Foreign institutional investors (FII’s) were net sellers from November 1997

through January 1998. The outflow, prompted by the economic and currency

crisis in Asia and some volatility in the Indian rupee, was modest compared to

the roughly dols 9 billion which has been invested in India by FII’s since 1992.

Every year since FII’s were allowed to participate in the Indian market, FII

net inflows into India have been positive, except for 1998-99. This reflects the

strong economic fundamentals of the country, as well as the confidence of the

foreign investors in the growth with stability of the Indian market. The year 2003

marked a watershed in FII investment in India. FII’s started the year 2003 in a big

way by investing Rs. 985 crore in January itself.

4

ACKNOWLEDGEMENT

First and foremost, I praise and thank God Almighty from the depth of my

heart, which has been the source of strength in the completion of this

Dissertation Work.

I would also like to express my gratitude to all my respondents for having

cooperated with me and having provided me with all the relevant information.

There was also a lot of help and encouragement that I had received from them in

order to complete this Project.

It is my profound concern to thank the Principal, Rev. Fr. Josekutty P. D,

Kristu Jayanti College who paved the path for offering me this opportunity and

avenues of infinite possibilities of knowledge.

And I am deeply indebted to Dr. JUSTIN NELSON MICHAEL, Kristu

Jayanti College, for his guidance, assistance and for giving all the formal

support to conduct this stud and for completing this Project Work.

I am also thankful to my sisters and friends for their encouragement and

support, Finally, I would like to express my sincere gratitude to all those who

spent their valuable time for providing the necessary data for this Organizational

Study.

USHA RANI.R

5

CONTENTS

Chapter 1

Introduction 1-20

1.1 Background of the study

1.2 In flows from foreign Institutional Investors

1.3 FII’s Growth in India

Chapter 2

Research Design 21-23

2.1 Statement of the problem

2.2 Literature Review

2.3 Scope of the study

2.4 Objective of the study

2.5 Methodology

2.6 Plan of Analysis

2.7 Limitation of the study

Chapter 3

Industry Profile 24-40

Chapter 4

Data Analysis and Interpretation 41-57

Chapter 5 58-60

Findings, Suggestions, conclusion

Bibliography

6

LIST OF TABLES/GRAPHS

Table No. Title Page No.

1. The table shows the* Net investment at US $ mn. at monthly exchange rate

41-42

2. FII’s shareholding in the year 43-44

3. t test results 44-45

4 Shareholding Pattern in Nifty Companies as of

September 2004

45-46

5 Value of FII’s Investment 46-47

6. Cap and Gap Analysis of FIIs Investment 48-49

7 Gap in Market Value 49-50

8

9

10

11

Trading Strategy of FII’s

FII Net Investments in different years

Gap Available for investments

Gap Analysis of FII’s Investment at Market Value

51

52-53

53-54

55-56

7

CHAPTER-1

INRODUCTIO

8

1 INTRODUCTION

1.1 Background of the study

Foreign investment refers to investments in the financial assets and production

processes of another country. After the opening up of the borders for capital

movement, these investments have grown in leaps and bounds. The effect of

foreign investment, however, varies from country to country. It can affect the

factor productivity of the recipient country and can also affect the balance of

payments.

In developing countries there has been a great need for foreign capital, not only

to increase the productivity of labor but also because foreign capital helps to

build up the foreign exchange reserves needed to meet trade deficits. Foreign

investment provides a channel through which developing countries can gain

access to foreign capital. It can come in two forms: Foreign Direct Investment

(FDI) and Foreign Institutional Investment (FII).

Foreign direct investment involves in direct production activities and is

also of a medium- to long-term nature. But foreign institutional investment is a

short-term investment, mostly in the financial markets. FII, given its short-term

nature, can have bidirectional causation with the returns of other domestic

financial markets such as money markets, stock markets, and foreign exchange

markets.

Hence, understanding the determinants of FII is very important for any

emerging economy as FII exerts a larger impact on the domestic financial

markets in the short run and a real impact in the long run.

9

The present study examines the foreign institutional investment in India, a

country that opened its economy to foreign capital following a foreign exchange

crisis.India, being a capital scarce country, has taken many measures to attract

foreign investment since the beginning of reforms in 1991 upto the end of

January 2003.

India succeeded in attracting a total foreign investment of around U.S.$48

billion out of which U.S.$12 billion was in the form of FII. These figures show the

importance of FII in the overall foreign investment program. India is in the

process of liberalizing its capital account, and this has a significant impact on

foreign investment and particularly on FII, which affects short-term stability in the

financial markets.

Hence, there is a need to determine the push and pull factors behind any

change in the FII, so that policies can be framed to influence the variables that

attract foreign investment. Also, FII has been the subject of intense discussion,

as it is held to be responsible for having intensified the currency crises of the

1990’s in East Asia and elsewhere in the world.

Foreign Institutional investors are the primary source of investment in

India. In September 1992 the Government of India announced the opening of the

country’s stock market to direct participation by FII’s through guiding for FII. In

November 1995 the regulations had been notified largely based on the earlier

guidance. The regulation require FII to register with SEBI and to obtain approval

from the RBI of India under the FII Act,1973 to enable them to buy and sell

securities to open foreign currency and rupee bank accounts and to remit and

repatriate funds.

10

One category of institutional investors eligible for registration as FII who

proposed to invest on their own behalf includes Pension Funds, Mutual Funds,

Investment Trusts, Insurance Companies, Charitable Societies. The other

categories of FII’s who proposed to invest their proprietary funds on or behalf of

broad based funds which are registered with SEBI as of accounts of FII’s include

asset management companies, investment advisor, nominee companies,

institutional portfolio managers, trustees and power of attorney holders.

FII may invest in India through two routes. One is Equity investment route

and 100%debit.Under the equity investment route 100% investment could be in

the equity related instruments or upto 30% could be invested in debit instrument.

A FII or a sub-account can hold up to 10% of paid up equity capital of any

company. The total investment by FII and sub-accounts in any Indian Company

cannot exceed 40% of its total paid up capital. FII have to pay tax at the rate of

10% on long term capital gains at 30% on short term capital gains and at the rate

of 20% on interest income. The amount invested in FII is fully convertible. For

this purpose FII are required to seek permission from the RBI under the Foreign

Exchange Regulation Act 1973. The FII which are active participants in the

Indian securities have been allowed to lend stocks through and approved

intermediary.

1.2 In flows from foreign Institutional Investors

Inflows from Foreign Institutional Investors (FII) into India have been

strong. FII’s poured in Rs7.49 bn, taking their net investment close to the billion

dollar mark (US$971.9mn). Foreign funds were net buyers of only US$316.7mn

in the Indian equities. Their net investment was US$1.35bn. FII’s were net sellers

of US$63.7mn. Year-to-date, their net inflows stand at US$2.58bn.

11

Overall fund flows into the emerging markets too have been good.

Emerging markets equity funds saw net inflows to the tune of US$1.1bn,

according to the Emerging Portfolio Funds Research (EPFR). With the latest

round of inflows, emerging market equity funds have attracted a net of about US

$4.9bn.

Within the emerging market space, investors particularly took a liking to

Latin America, brining in about US $260mn during the week under review,

totaling 1.03% of assets under management. "Investors responded to evidence

that demand for the region’s commodities will continue to underpin prices, In

flows into the geographically-diversified Global Emerging Markets (GEM) equity

funds were only 0.24% of assets under management. Asian funds (ex- Japan)

saw the largest inflows, pulling in a net of US $472.7mn. GEM equity funds have

seen net inflows of over US $2bn.

However, this is much lower than US $11.45bn these funds pulled in

during the same period. Japanese funds had net outflows for the fifth time in six

weeks amid nagging concerns about the strength of the world’s No.2 economy.

Global equity funds, dedicated largely towards the developed markets, attracted

US $2bn of inflows during the week and have now recorded net inflows of around

US $20bn so far in 2007.

In 2006, these funds had witnessed net inflows of US $29.6bn. "These

funds benefited from their heavy exposure to Europe. Equity markets in France,

Germany, Italy, Spain and the UK remain at or around six-year highs thanks to a

better than expected earnings outlook and a surge in mergers and acquisitions

activity," . But investors in US equity funds domiciled outside of the US were not

impressed since they were responsible for the redemptions, removing US

12

$390mn from these funds. Still, the US $153.9mn of outflows from all US equity

funds was better than the stronger outflows of recent weeks," according to EPFR.

Foreign Institutional Investors

FII’s including pension funds, mutual funds, investment trusts, university

funds, endowments, foundations or charitable trusts or charitable societies, etc.

are permitted to invest in all securities, i.e. equity shares/ debentures/ PCDs

/FCDs /Rights renunciations /warrants of Indian companies (other than Banking

Companies) listed as well as unlisted, dated Government securities, Treasury

bills and units of domestic mutual fund schemes in the primary and secondary

markets. Investments by FIIs will be subject to a ceiling of 24% of the total paid

up equity capital of the company.

The ceiling would apply to all holdings taken together including

conversions out of the fully and partly convertible debentures issued by the

company. The holding of a single FII or each SEBI approved sub-account of an

FII or the concerned FII group in any company would also be subject to a ceiling

of 10% of the total issued and paid up capital of the company. Indian companies,

however, would be permitted to raise the normal ceiling limit of 24% to 40% of

the issued and paid up capital of the company provided it has been approved by

the Board of Directors of the company and a Special Resolution is passed to that

effect by the General Body.

The ceiling of 24% or 40%, as the case may be, applicable for investment

by FII’s will not include investments made by NRI’s / OCB’s under the Portfolio

Investment Scheme. It will also not include direct foreign investment by an FII as

a foreign collaborator and investment by FII’s through off-shore funds,

13

Global Depository Receipts and Euro-Convertible Bonds. FII’s are

required to register themselves with Securities and Exchange Board of India

(SEBI) before they invest in the Indian capital market. Application for registration

should be made by FII’s to SEBI in the prescribed form in duplicate.

The application will be forwarded by SEBI to Reserve Bank. Reserve Bank

will grant permission under FERA 1973 to the bank branch designated by the

applicant FII to buy/sell equity shares/ debentures/ warrants/dated Government

securities/Treasury Bills /units of domestic mutual funds. Reserve Bank's

permission will be initially valid for five years and will be operative only after

obtaining registration from SEBI. This permission can be renewed for a further

period of five years on request.

Reserve Bank's permission would enable the FII’s to buy/sell the

securities and remit the income/dividend/sale proceeds after payment of

applicable taxes through the designated bank branch. Reserve Bank's

permission will also cover investment in shares/debentures of Indian companies

in primary market i.e. new issues provided the company has reserved certain

quota out of its public issue in favor of FII’s.

The designated bank branch is required to submit to Reserve Bank a

statement in form LEC(FII) on daily basis in respect of purchases/ sales of

shares/ debentures made for the purpose of monitoring by Reserve Bank the

overall ceiling of 24% or 40%, as the case may be, referred to in sub-paragraph .

In order to facilitate making of investments in India and repatriation of

income/sale proceeds of such investments, Reserve Bank will permit the

designated bank to open a foreign currency denominated account and a special

Non-resident Rupee account in the name of FII.

14

The designated bank branch will also be permitted (a) to transfer funds

from foreign currency account to rupee account and vice versa, (b) to make

investments out of the balance in the rupee account, (c) to credit sale proceeds

of shares and other investments as also dividend/interest earned on the

investments to the rupee account and (d) to transfer the repatriable proceeds

(net of taxes) from the rupee account to the foreign currency account. Reserve

Bank vide its Notification No.F.E.R.A.212/99-RB dated 18th October 1999 has

granted general permission to mutual funds in India to issue units or similar

instruments to FII’s under the schemes approved by Securities and Exchange

Board of India and to send such units/instruments out of India to their global

custodians, as also to repurchase units/instruments from FII’s

Foreign institutional investors (FIIs) are back in the Indian stock markets.

In April 2007, the net inflow of FII investment in equities has touched $1.56 billion

as against a net outflow of $ 243.90 million in March 2007.

The companies have good order positions. And with India emerging as a

manufacturing hub after China, the growth story is likely to continue. Though

inflation and rising interest rates are casting a shadow over high growth rate,

investors think that performance of the Indian companies won't be affected due to

strong domestic and international demand.

In 2007, the net investment of FII’s in stocks has reached $3.05 billion as

against $ 3.57 billion in the same period of the last year. Foreign investors have

turned positive (buyers) in April 2007 after becoming net sellers in March. In

February also FII’s were aggressive buyers and increased their exposures by

$1.62 billion (Rs.7240crore). But the 30-share sensitive index of Bombay Stock

Exchange (BSE) fell 1,153 points to close at 12,938 on February 28 as against

the close of 14,091 on last trading day of January 2007.

15

However FII’s become net sellers, but the Sensex improved marginally by

134 points. Though FII’s are the major players, domestic investors also play

important roles in the equity market.

Unless FIIs turn big sellers or buyers, market is not hugely influenced by

them. When FII’s were net sellers of $370.90 million, Sensex fell by 541 points to

close at 12,938.

When FIIs were net sellers by $99 million, the Sensex improved by 222

points to close at 13,160 points. On March 6, 2007, when FIIs were net sellers by

128.70 points, Sensex improved by 282 points to close at 12,697 points. But as

FII’s net investment so far in the Indian capital market is $52.14 billion and will

play an important role in the market. In April 2007, the Sensex has improved by

836 points on the back of strong FIIs' inflow.

FII inflows cross US$ 3 bn mark

It's raining dollars in the Indian stock market with the overseas investment

on the local bourses crossing three-billion dollars mark since the beginning.

Foreign Institutional Investors have put in a net of US$3.05 billion in the Indian

stocks so far in 2007, while taking their total net investment in the country so far

to over US$52 billion. However, the net FII inflows in the first four months of 2007

are over a billion dollars.

More than half of the net investment by FII’s in the month of April 2007

alone after the overseas investors returned to the bourses with positive

sentiments as Sensex regained its once-lost 14,000 level. The bourses had

witnessed a herd-like flight of FIIs after a sharp fall in February but with the

corporate earnings results meeting or beating expectations, the sentiments have

improved considerably, said a broker.

According to the data available with the market regulator SEBI, FIIs

purchased stocks worth close to Rs 46,400 crore and sold stocks worth about

16

Rs 39,500 crore in April 2007, taking their net investment to about Rs 6,900 crore

(about 1.56 billion dollars).

However, the net FII investment for January-April period is estimated to

remain around three-billion dollar level, as against about 3.3 billion dollars in the

same period of 2006.FII’s had purchased stocks worth a net of about eight billion

dollars in entire 2006, as against a record high of 10.7 billion dollars in 2005.

After playing second fiddle to foreign institutional investors for over a decade,

domestic mutual funds are with a combined equity asset of about $23-24 billion

now, mutual funds are regularly playing counter-balance to FII’s. According to

market players and fund managers signs of rising to a position of strength from

where they could call the shots in the Indian market boosted by huge inflows in a

slew of new equity fund offers in the first half of the current year, the MF’s had

provided a much-needed cushion to the marker in May and June when FIIs were

selling heavily.

As a result, while the net fund infusion by FIIs between May 11 and

October 13,2005 stands at about Rs 3,000 crore, during the same period the

MFs had put in more than double that amount SEBI data showed. This welcome

change, according to fund managers, was possible mainly because of increasing

retail participation.

1.3 FII’s Growth in India

Mutual funds have also been net buyers though they are conservatively

cautious on the markets. The problem is that since FII’s have been buying for a

series of Six months it is a time for them to sell off and are they going to again

dump the stocks. There may be bouts of profits booking in the markets but these

are good signs and are important for markets to consolidate before moving

ahead.

International capital flows and capital controls have emerged as an

important policy issues in the Indian context as well. The danger of Mexico-style

‘abrupt and sudden outflows ’ inherent with FII flows and their destabilizing

17

effects on equity and foreign exchange markets have been stressed. Some

argues that FII flows have no significant benefits for the economy at large. A

proper understanding of the nature and determinants of these flows, however, is

essential for a meaningful debate about their effects as well as predicting the

chances of their sudden reversals.

FII’s' demand for quick gains

Also, the national interest may not always coincide with the FIIs' demand

for quick gains,conflict situations can emerge. The country must learn to deal

with such conflicts without affecting its interests. Institutions are becoming larger

and in many cases dwarf sovereign governments. Their ability to arm-twist

central banks and finance ministries is well known. Hence, while encouraging

foreign fund flows in the stock market, the policy-makers must be prepared for

the worst. As of December 2006 993 FIIs were registered with the Securities and

Exchange Board of India. Positive tidings about the Indian economy combined

with a fast-growing market have made India an attractive destination for foreign

institutional investors (FIIs).

The number of foreign institutional investors (FIIs) registered with the

Securities and Exchange Board of India (SEBI) has now increased to 1,030. In

the beginning of 2006, the figure was 813. As many as 217 new FIIs opened their

offices in India during 2006. This is the highest number of registrations by FIIs in

a year till date. The previous highest was 209 in 2005. The net investments made

by the institutions during 2006 was US$ 9,185.90 million against US$ 9,521.80

million in 2005

India opened its stock market to foreign investors in September 1992 and

since then has received portfolio investment from foreigners in the form of foreign

18

institutional Investment in equities. This has become one of the main channels of

FII in India. In order to trade in the Indian equity market, foreign corporations

need to register with the Securities and Exchange Board of India (SEBI) as

foreign institutional investors.

India allows only authorized foreign investors to invest in pension funds,

investment trusts, asset management companies, university funds, endowments,

foundations, charitable interests and charitable societies that have a track record

of five years and which are registered with a statutory authority in their own

country of incorporation or settlement. It is possible for foreigners to trade in

Indian securities without registering as an FII but such cases require approval

from the Reserve Bank of India (RBI) or the Foreign Investment Promotion Board

(FIPB).Foreign institutional investors generally concentrate on the secondary

market. The total amount of foreign institutional investment in India has

accumulated to the formidable sum of over U.S.$12 billion as of January 2003..

1.4 Some investment highlights:

Billionaire investor George Soros-owned fund Dace croft and New York-

based investment firm Blue Ridge are picking 21 per cent equity stake in Anil

Dhirubhai Ambani Group's Reliance Asset Reconstruction Company (Reliance

ARC).

A clutch of financial investors including Government of Singapore

Investment Corporation (GIC) and the New York-based hedge fund Galleon

Partners have picked up around 20 per cent stake in Edelweiss Capital for

around US$ 90 million. US-based Private equity major Blackstone Group is close

to investing nearly $60-65 In India, all of us are used to the notion of `FII' as

being the channel through which foreign investors access the Indian market.

But looking forward, the future easing of capital controls in India will some

19

day involve eliminating the concept of the FII, and opening up the equity spot and

derivatives markets to anyone in the world. The FII is a piece of State-induced

canalisation, and it will surely (someday) go the way of canalisation to favour the

State Trading Corporation or import license holders. It is, hence, of interest to all

of us to ponder what lies beyond.

.

The Indian firm will treat the orders coming from the U.S. brokerage firm

as one big customer, except for the purpose of a `large trader reporting system'

(which isn't yet in place in India) where the names of large positions are required.

The article says: Regulatory authorities in some countries have responded by

banning omnibus accounts, but this leads to at least two problems.

First, it becomes less efficient for global brokers and their customers to

enter those markets, and in some cases legally impossible. Second, some

market participants will resort to trading "look-alike" contracts with their broker on

an over-the-counter basis. The broker then offsets these contracts by

establishing an identical position on the exchange.

This arrangement does allow these customers to trade these markets, but

it provides the regulators with even less information on the ultimate customer. In

any case, many institutional investors do not like the lack of price transparency of

over-the-counter contracts, so they avoid these markets. This deprives new

exchanges of liquidity. In India, these "look-alike" contracts go by the name of

Participatory Notes.

It is found fascinating that in the same issue of Futures Industry magazine,

there was an article on developments in Taiwan which is a country which is in the

midst of this FII Ombinus Accounts transition. Taiwan is like India in having a

very big direct retail participation in the securities markets. Roughly 10% of their

20

population trades - in an Indian setting, that would translate to 100 million direct

market participants.

Taiwan is trying to move towards one thing is right: to merger between

the spot stock exchange and the futures exchange. Right from the L. C. Gupta

report onwards, India has been clearheaded on this, requiring no silly separation

between the spot and the derivative. But the other frontiers which Taiwan is

moving on are a jump ahead of us. They are removing their QFII system, and

shifting to omnibus accounts. They are worrying about offering a range of traded

products which are interesting to global market participants - such as gold futures

and a dollar denominated Taiwanese stock market index - so as to make

Taiwan a trading centre for market participants from all over the world. They are

increasing the size of position limits. Taiwan is one of the unhappy countries

which has taxation of financial transactions - a bad idea in public finance if there

ever was one. They seem to be headed to drop the tax rate from 2.5 basis points

to basis point. Finally, you might find this article on Mexico interesting; they

already have omnibus accounts.

The year 2007 was one more unusual year in India's stock markets. It

began with the Sensex still at a high and above the 6000 mark. It witnessed a

decline to a low in mid-May of around 4500, delivered ultimately with the market's

single day loss of close to 565 points. It then registered a recovery that turned

into a bull run, which took the Sense to 6679 on the first trading day in the New

Year. And then it witnessed an abrupt end to the bull run, signalled by a 316-

point intra-day decline in the Sensex

FII Investment in future republic offerings

 Securities and Exchange Board of India’s latest guidelines on

participation of qualified the FII Investment in future republic offerings under the

new norms, QIBs will now have to bring in at least 10% margin while submitting

bids in public offers through the book building route. So far, while institutional

21

investors — like FIIs, banks and mutual funds — were not required to deposit

any money while submitting bids for a public issue through book-build route,

retail investors had to deposit the entire bid amount with the application.

That’s not all. Sebi has also drafted norms for allotment of shares in QIB

category, which is normally 50% of the offer size. So far, allotments to QIBs were

the discretion of the issuer. Under the new guidelines, allotment of shares to

QIB’s shall be on a proportionate basis.

A senior merchant banker said this would make it difficult to market shares

through the book-build route to FIIs based outside India. He said many of the

large FIIs registered with Sebi mostly operate from Singapore, Hong Kong,

London, New York and Los Angeles. "These large international players would not

change the norms that they were following so far to invest in India

A source said FIIs do not invest in a country unless they are sure of an

investment. "Even when they operate in secondary market, they buy the shares

and then move in the fund just before the pay-in time." With the new system

restricting issue managers from committing shares to an FII, sources said, many

large institutional investors are not likely to apply at all. "Besides, FIIs are not

interested in buying shares in small lots as it tends to increase cost of operation.

In the new system, the number of shares allotted to an FII would be restricted to

few hundreds which they might not be interested in taking at all."  

After playing second fiddle to foreign institutional investors for over a

decade, domestic mutual funds are now showing signs of rising to a position of

strength from where they could call the shots in the Indian market. With a

combined equity asset of about $23-24 billion now, mutual funds are regularly

playing counter-balance to FIIs, market players and fund managers said.

Boosted by huge inflows in a slew of new equity fund offers in the first half

of the current year, the MFs had provided a much-needed cushion to the marker

22

in May and June when FIIs were selling heavily. As a result, while the net fund

infusion by FIIs between May 11 and October 13 stands at about Rs 3,000 crore,

during the same period the MFs had put in more than double that amount, Sebi

data showed. This welcome change, according to fund managers, was possible

mainly because of increasing retail participation.

Over the last several months, whether markets were in a bullish phase or

bearish, we have always seen positive gross inflows into equity funds," said head

of equity at a fund house. This also counters the general notion that retail

investors have not participated in the current rally.

Portfolio investment flows from industrial countries have become

increasingly important for developing countries in recent years. The Indian

situation has been no different. In the year 2000-01 portfolio investments in India

accounted for over 37% of total foreign investment in the country and 47% of the

current t account deficit. The corresponding figures in the previous year were

59% and 64% respectively. A significant part of these portfolio flows to India

comes in the form of Foreign Institutional Investors ’ (FIIs ’ ) investments, mostly

in equities.

Ever since the opening of the Indian equity markets to foreigners, FII

investments have steadily grown from about Rs. 2600 crores in 1993 to over

Rs.11,000 crores in the first half of 2001 alone. Their share in total portfolio flows

to India grew from 47% in 1993-94 to over 70% in 1999-2000 1 . The nature of

the foreign investor ’ s decision-making process, that lies at the heart of the

portfolio flows, is briefly outlined While it is generally held that portfolio flows

benefit the economies of recipient countries 2 , policy-makers worldwide have

been more than a little uneasy about such investments.

23

Portfolio flows – often referred to as “ hot money ” – are notoriously

volatile compared to other forms of capital flows. Investors are known to pu ll

back portfolio investments at the slightest hint of trouble in the host country often

leading to disastrous consequences to its economy. They have been blamed for

exacerbating small economic problems in a country by making large and

concerted withdrawals at the first sign of economic weakness.

They have also been held responsible for spreading financial crises –

causing ‘contagion’ in international financial markets Prominent economists

have, for these reasons, expressed doubts about the wisdom of the IMF view of

promoting free capital mobility among countries. International capital flows and

capital controls have emerged as an important policy issues in the Indian context

as well. The danger of Mexico-style ‘abrupt and sudden outflows’ inherent with

FII flows and their destabilizing effects on equity and foreign exchange markets

have been stressed. Some authors have argued that FII flows have, in fact, had

no significant benefits for the economy at large.

While these concerns are all well-placed, comparatively less attention has

been paid so far to analyzing the FII flows data and understanding their key

features. A proper understanding of the nature and determinants of these flows,

however, is essential for a meaningful debate about their effects as well as

predicting the chances of their sudden reversals.

In an attempt to address this lacuna, this paper undertakes an empirical

analysis of FII investment flows to India. The objective at present is to gain a

better understanding of the nature and determinants of FII flows. Towards this

end we first take a look at the FII investment flows data to bring out the key

features of these flows.

1.5 Relationship between FII flows and the stock market returns in India

24

The relationship between FII flows and the stock market returns in India

with a close look at the issue of causality.The impact of other factors identified in

the portfolio flows literature on the FII flows to India. In all of these investigations

we make a distinction between the pre-Asian crisis period and the post -Asian

crisis period to check if there was a regime shift in the relationships owing to the

Asian crisis.

The section sketches a brief review of the recent literature in the area. It

provides an over view of the nature and sources of portfolio flows in India

pointing out their main characteristics. It probes into the possible determinants of

FII flows to India..

India opened its stock markets to foreign investors in September 1992 and

has, since 1993, received considerable amount of portfolio investment from

foreigners in the form of Foreign Institutional Investor ’ s (FII) investment in

equities. This has become one of the main channels of international portfolio

investment in India for foreigners . In order to trade in Indian equity markets,

foreign corporations need to register with the SEBI as Foreign Institutional

Investors (FII) . SEBI ’ s definition of FIIs presently includes foreign pension

funds, mutual funds, charitable/endowment/university funds etc. as well as asset

management companies and other money managers operating on their behalf.

The trickle of FII flows to India that began in January 1993 has gradually

expanded to an average monthly inflow of close to Rs. 1900 crores during the

first six months of 2001. By June 2001, over 500 FIIs were registered with SEBI.

The total amount of FII investment in India had accumulated to a formidable sum

of over Rs. 50,000 crores during this time . In terms of market capitalization too,

the share of FIIs has steadily climbed to about 9% of the total market

capitalization of BSE (which, in turn, accounts for over 90% of the total market

capitalization in India).

25

The sources of these FII flows are varied. The FIIs registered with SEBI

come from as many as 28 countries (including money management companies

operating in India on behalf of foreign investors). US-based institutions

accounted for slightly over 41%, those from the UK constitute about 20% with

other Western European countries hosting another 17% of the FIIs . It is,

however, instructive to bear in mind

The national affiliations do not necessarily mean that the actual investor

funds come from these particular countries. Given the significant financial flows

among the industrial countries, national affiliations are very rough indicators of

the ‘home’ of the FII investments.

In particular institutions operating from Luxembourg, Cayman Islands or

Channel Islands, or even those based at Singapore or Hong Kong are likely to be

investing funds largely on behalf of residents in other countries. Nevertheless,

the regional breakdown of the FIIs does provide an idea of the relative

importance of different regions of the world in the FII flows.

In 2004-05 portfolio investments in India accounted for about 62% of total

Foreign investment in the country and at about 1.29% of GDP well exceeded the

current account deficit (0.95% of GDP). Foreign Institutional Investors’ (FIIs’)

investments accounted for about 97.5% of this. Ever since the opening of the

Indian equity markets to foreigners, FII investments have steadily grown from

about Rs. 2,600 crores in 1993 to Over Rs.48, 000 crores in 2005. At the end of

June 2006, the cumulative FII flows to India accounted for a little over 9% of the

Bombay Stock Exchange market capitalization.

While it is generally held that portfolio flows benefit the economies of

recipient Countries, policy-makers worldwide have been more than a little uneasy

about such Investments. Often referred to as “hot money”, they are known to

stampede out at the slightest hint of trouble in the host country leaving an

26

economic wreck in their wake, like Mexico in 1994. They have been blamed for

exacerbating small economic problems in a Country by making large and

concerted withdrawals at the first sign of economic weakness. They have also

been held responsible for spreading financial crises – causing ‘Contagion’ in

international financial markets.

International capital flows and capital controls have emerged as important

policy Issues in the Indian context as well. The danger of abrupt reversals and

their destabilizing Consequences on equity and foreign exchange markets are

always a concern Nevertheless, in recent years, the government has been

making strong efforts to increase

FII flows in India from being healthy for the economy, FII inflows have actually

imposed certain burdens on the Indian economy.

Understanding the determinants and effects of FII flows and devising

appropriate Regulation therefore constitute an important part of economic policy

making in India entities covered by the term ‘FII’ include “Overseas pension

funds, mutual funds, Investment trust, asset management company, Nominee

Company, bank, institutional Portfolio manager, university funds, endowments,

foundations, charitable trusts, Charitable societies, a trustee or power of attorney

holder incorporated or established Outside India proposing to make proprietary

investments or investments on behalf of abroad-based fund (i.e., fund having

more than 20 investors with no single investor

Holding more than 10 per cent of the shares or units of the fund. FIIs can

invest their own funds as well as invest on behalf of their overseas clients

registered as such with SEBI. These client accounts that the FII manages are

known as ‘sub-accounts’.

A domestic portfolio manager can also register itself as an FII to manage

the funds of sub-accounts. A few large FIIs (less than 3% of all registered ones,

according to GOI (2005)), issue derivative instrument s called ‘participatory

27

notes’ that are registered and traded overseas, backed by the FIIs’ holdings of

Indian securities. This arrangement has raised some concerns in regulatory

circles since it makes it difficult to trace the ultimate beneficiary in the funds and

may be used to bring in “unclean” funds (funds generated Out of illegal activities)

into the Indian markets.

As of mid-July 2006, there were 932 FIIs registered with SEBI, of which

115 Were registered in the first half of 2006 itself. US-based funds accounted for

39% of all registered FIIs, followed by UK-based ones (16%), Luxembourg (7%)

and Singapore (5%). In terms of net cumulative investment, US based funds

accounted for 29% at the end of October 2005 (GOI (2005))

Though initially restricted to investing only in listed company stocks, FIIs

are now allowed to invest in equity, bonds and derivative instruments in India

subject to limits of foreign ownership for various sectors as well as ceilings on

total investment per FII. Regular FII’s follow what has come to be known as the

“70:30 rule”, i.e. they must invest no less than 70% of their funds in equity-related

instruments and may invest the remainder in debt-related instruments. There are

also some FIIs that are registered as “100 per cent debt-fund FIIs” that are

permitted to invest exclusively in debt instruments.

Although equity holdings of FIIs have received maximum attention from

the press, researchers and policymakers alike, the debt holdings of FIIs are not

wholly insignificant. As of July 21, 2006, the regular FIIs held USD 224.25 million

(about Rs. 1,009 crores) in government securities/Treasury Bills and USD 82.02

million (about Rs. 369 crores) in corporate debt. At the end of June 2006, the

open interest of FIIs in stock and index futures and options exceeded Rs 22,000

crores.

28

CHAPTER-2

RESEARCH

DESIGN

29

2.1 Introduction

Foreign companies/Individuals are permitted to invest in equity shares

traded in Indian Stock markets if they are registered as a Foreign Institutional

Investor (FII) or if they have a sub account in India.

Investment in Indian securities is also possible through the purchase of

Global Depository Receipts (GDR), American Depository Receipts (ADR),

Foreign Currency Convertible Bonds and Foreign Currency Bonds issued by

Indian issuers, which are listed, traded and settled overseas and mainly

denominated in US dollars.

FII investments in Indian capital market is more than US $ 11,000 million.

Indian Stock market with a market capitalization of over US $ 165,000 million has

been a major attraction for investors all over the world

2.2 Statement of The problem

A hectic flow of FII in Indian market witnessed a terrific bounce of sensex

from a level market of 7500-8000 to 14000. A genuine research is very much

required to study the pattern and impact of Foreign Institutional Investment.

2.3 Reviewing the Literature

A survey of the literature shows that existing studies do not account for

volatility which can be expected in most of the monthly financial time series Data

30

yet given the increase in financial market integration, both domestically and in

foreign financial markets, accounting for volatility is unavoidable.

Further, the existing studies either do not incorporate risk in foreign and

domestic markets or make use of realized risk, an approach that does not always

yield robust results.

This is because standard deviation/variance (realized risk variable)

increases in 482 Investments, either domestic or foreign, depend heavily on risk

factors. Hence, while studying the behavior of FII, it is important to consider the

relationship between unexpected risk and FII is obscure.

Therefore, while examining the impact of risk on FII, one needs to

separate the unobserved component from the realized risk.

Another possible determinant of FII is the operation of foreign factors such

as Returns in the source country’s financial markets and other real factors in the

source Economy. So far, however, studies have found that both return in the

source country stock market and the inflation rate have not exerted any impact

on FII. The world stock market capitalization had a favorable impact on the FII in

India.

Since investment in stock markets is sentiment driven, and is affected

more or less by everything, the crucial task is to identify a few critical

determinants. .

2.4 Scope Of The Study

It covers the foreign investments made in Indian capital market from 2002-2006.

2.5 Objectives of The Study

31

1. To understand the overall stock market in India.

2. To study the structure of FII in India

3. To understand the impact of FII on Indian stock market.

2.6 Research Methodology

This study is based on Secondary data which will be collected from books,

Internet, Reports, newspapers and the method of study reveals the data

gathered for analysis of data & presenting in a proper form. The collection of data

is done through-

Secondary data analysis:

These are interpretations of primary data which include encyclopedias,

textbooks, handbooks, magazines & newspaper articles.

2.7 Operational Definition Of Concepts

FII- . Means an entity established or incorporated outside India which

proposes to make investment in India.

FIPB- Foreign investment promotion is regulatory govt. agency which is

been established to promote FDI, FII in various sectors.

PLAN OF ANALYSIS

The data would be collected through secondary sources. This data is

analyzed implementing by using statistical tools, ratios, Tables etc.

32

2.7 Limitations of the study

The data collected is not available in updated form; it is one of drawbacks of

this study. The information collected is extracted from secondary data analysis

through internet & the information is already in historical format.

33

CHAPTER-3

INDUSTRY

PROFILE

34

Stock Market

Foreign Institutional Investors have put in a net of 3.05 billion dollars (over

Rs 13,500 crore) in the Indian stocks so far in 2007, while taking their total net

investment in the country so far to over 52 billion dollars. However, the net FII

inflows in the first four months of 2007 is over a billion dollars, less than the figure

invested in the same period of the previous year.

More than half of the net investment by FII’s this year came in the month

of April alone after the overseas investors returned to the bourses with positive

sentiments as Sensex regained its once-lost 14,000 level. The bourses had

witnessed a herd-like flight of FII’s after a sharp fall in February this year, but with

the corporate earnings results meeting or beating expectations, the sentiments

have improved considerably, said a broker.

According to the data available with the market regulator SEBI, FIIs

purchased stocks worth close to Rs 46,400 crore and sold stocks worth about Rs

39,500 crore in April 2007, taking their net investment to about Rs 6,900 crore

(about 1.56 billion dollars). However, the net FII investment for January-April

period is estimated to remain around three-billion dollar level, as against about

3.3 billion dollars in the same period of 2006, said another broker.

FII’s had purchased stocks worth a net of about eight billion dollars in entire

2006, as against a record high of 10.7 billion dollars in 2005. A sharp plunge of

about 30 per cent in the May-June period and another major fall in December

were the major drivers for the decline in FII inflows last year.

However, if the prevailing positive trend continues on the FII front, the total

overseas investment on the domestic bourses could rise to as high as 12 billion

dollars, while beating the record set in 2005, the broker added.

35

Besides, the depreciating dollar against the Indian rupee could also propel

the net FII inflows in terms of the US currency. A lot would depend on how the

market reacts to further corporate earnings results going forward, the analysts

believe. If the benchmark Sensex manages to regain the 14,000 level decisively

by keeping above this mark for a couple of weeks, the sentiments could get a

significant boost and herald a prolonged uptrend on the bourses.

the Sensex plunged by more than 320 points while ending a five-day upward

rally primarily driven by strong corporate results.

Foreign Institutional Investors have put in a net of 3.05 billion dollars (over

Rs 13,500 crore) in the Indian stocks so far in 2007, while taking their total net

investment in the country so far to over 52 billion dollars. However, the net FII

inflows in the first four months of 2007 is over a billion dollars, less than the figure

invested in the same period of the previous year.

More than half of the net investment by FII’s came in the month of April

2007 alone after the overseas investors returned to the bourses with positive

sentiments as Sensex regained its once-lost 14,000 level. More than half of the

net investment by FII’s this year came in the month of April alone after the

overseas investors returned to the bourses with positive sentiments as Sensex

regained its once-lost 14,000 level.

Considering the tremendous growth in India and huge FII flows coming into Asia

and more importantly China and India - India seems to be the hottest destination.

Equity booming, financial services & political environment more open leads to

positive outlook the government and the regulatory authorities have tried hard to

bring more transparency and clarity in the market processes and environment.

The growth fundamentals of the country are pretty strong and India is on target to

achieve 8% growth.

36

The FII’s have shown immense interest in our markets showcasing the

belief in our markets even though the Indian market is considered a bit

overvalued compared to its peers. So everything looks promising with a bit of

cautiousness coming from the coalition government wherein the Left does create

problems at times Growth seems to be taking more roots and spreading across

various sectors. Persistence of this growth may lead to long-term benefits in

terms of Income and Wealth. economy growing at 7-8%, significant jump in credit

off-take increase in investments

FII putting in more USD 10 billion this year The markets have seen

exceptionally high liquidity driven growth over the last year The way the markets

have sustained the high growth rates defying expectations The political stability

and conformance to liberalization and market economy principals across the

politics spectrum The main reason for being a little more optimistic is that while

there have been set backs in the reform process, there have been a few positive

signals off late.

Currently Indian equities are fairly valued, but, should the reform process

get back on track, there is potential for higher growth. FII Inflows have been

growing at an amazing rate. The Indian markets still are trading lower than other

emerging market PEs. Growth is not speculative but fundamental in nature The

Indian stock market has delivered very high returns in the past 2 years and right

now the BSE-Sensex remains at an all-time high.

The market seems to be over-heated and some of the valuations are not

sustainable. The upswing in Sensex has been mainly on account of cheap

foreign money (they do not have an option as the long term yield curve is flat)

coming into India The market may undergo a sharp correction from these levels

as the fickle-minded foreign money moves out.

37

The trigger for that would be slowdown of economic growth due to rising

current account deficit, higher inflation, lower than expected growth in corporate

earnings and global recession. Also, the quality of earnings seems suspect for a

large no. of the mid-cap companies. the BSE Bombay stock exchange as an

indicator, clearly there is too much money running after too few stocks, this has

resulted in the average PE changing from 12-13(2004) to about 15 (2005) in a

years time.

Given that India is part of the "emerging markets" and an overall bullish

sentiment of institutional funds like CALPERS this upward trend is likely to

continue. view is as regards to investment in the sectors and not in the stock

markets. Regarding investment in the stock market, within the last one year my

view has changed from being optimistic to slightly cautious. Corporate

disclosures have improved significantly over the past five years.

There has also been market structure improvement over the last 6-7

years. Investing in Indian equities always appealed to bottom-up investors, now

with increased focus on improving demographics and potential increased capital

investments over the next 15-20 years, India has become a more appealing top-

down investment story.

The Indian market has become too expensive and it has become extremely

difficult to identify undervalued investment ideas the investment climate and

market sentiment in India is very positive. The economy is on a consistently

growing trend. India Inc has been performing well and over and above

expectations. There has been a strong rebound in the investment/infrastructure

spending in the country, besides India being a preferred destination for

outsourcing. Given the growth in corporate profits and credit off take, the rally in

the stock markets and hardening interest rates seem justified

38

Over the last few years, research has brought to light a few important

features of FII flows to India. The key question has been the relationship between

FII flows and returns in the Indian markets . Clearly FII equity investments and

the stock market performance in India have been very closely interlinked. Also

both variables experience a sharp break around April of 2003 after which they

ramp up steeply. The association is unmistakable – the correlation of monthly net

FII equity inflows and monthly Sensex returns is 0.61 since April 2003 and 0.33

in the overall sample.

FII flows are routinely depicted as a major driver of Indian stock market

return in the financial press. However, research seems to suggest they are more

of an effect than a cause of stock market performance. Analyzing daily flow data

during 1999.Tthe post-Asian crisis period, stock market performance has been

the sole driver of FII flows, though monthly data in the pre-Asian crisis period

may suggest some reverse causality.

This return-chasing behavior has been confirmed using daily data during

1999-2002 in the sales of Indian securities by FIIs are affected by returns but not

purchases. Analyze monthly data over the period 1993-2000 to conclude that FII

flows are negatively related to lagged stock market returns, suggesting negative

feedback trading. There are, however, issues about the appropriateness of using

monthly data

The largest single-month pull-out of FII funds happened in May 2006 when

the FIIs withdrew over $1.7 billion (Rs. 8247 crores) followed by May 2004 ($ 719

million, Rs. 3250 crores). These were also the months with the fourth largest and

the largest single month percent decline in the Sensex respectively (15.8% and

18.8% respectively) in the post reforms era.

39

Government policy regarding FII flows

In policy circles in India, FII flows are believed to have a positive impact on

the country’s development ; so much so that encouraging FII flows – while

reducing the financial sector’s vulnerability to speculative capital flows –

constitute an objective of the National Common Minimum Programme.

Accordingly, an expert group was set up in 2004 (in addition to a

committee in 2002 which reported in 2004) to suggest ways to accomplish this

goal. The group submitted its report in November 2005 (GOI 2005). Its 6

rationale for encouraging FII flows is that such flows can increase domestic

investment without increasing foreign debt. They can raise stock prices, lower

cost of equity and stimulate investment by Indian firms and lead to improvements

in securities market design and corporate governance.

FII inflows into India

.

Net FII inflows into India increased steadily through the decade of the

1990s to reach an annual peak of US$10.25 billion in 2004-05 (Table 1).

Cumulatively, FII investments as onOctober 31, 2005 have been US$ 39.27

billion.1. Every year since FIIs were allowed to participate in the Indian market,

FII net inflows into India have been positive, except for 1998-99.

This reflects the strong economic fundamentals of the country, as well as

the confidence of the foreign investors in the growthwith stability of the Indian

market. The year 2003 marked a watershed in FII investment inIndia. FIIs started

the year 2003 in a big way by investing Rs. 985 crore in January

itself.Meanwhile, corporate India continued to report good operational results.

40

This, along with good macroeconomic fundamentals, growing industrial

and service sectors led FIIs to perceive great RBI data generally shows that

investment by FIIs has been smaller, when compared with SEBI data. This

discrepancy in the statistical system needs to be corrected. One possible

explanation may involve differences in the treatment of reinvestment of profit

earned. potential for investment in the Indian economy.

The year 2004 was one more unusual year in India's stock markets. It

began with the Sensex still at a high and above the 6000 mark. It witnessed a

decline to a low in mid-May of around 4500, delivered ultimately with the market's

single day loss of close to 565 points. It then registered a recovery that turned

into a bull run, which took the Sense to 6679 on the first trading day in the New

Year. And then it witnessed an abrupt end to end bull run, signaled by a 316-

point intra-day decline in the Sensex on January

This volatility has been visible in the medium and long terms as well. From

a low of 2924 on April 5, 2003, the Sensex had risen to 6194 on January 14,

2004, only to fall to 4505 on May 17, before rising to close at a peak of 6679 on

January 3, 2005. These wild fluctuations have meant that for those who bought

into the market at the right time and exited at the appropriate moment, the

average return earned through capital gains were higher in 2003 than 2004,

despite the extended bull run in the latter year.

There are two messages that this experience sends out. The first is that, if

market expectations can turn so whimsically, the signals or rumours on which

they are based must lack any substance since any "fundamentals" on which they

could be anchored have not shifted so violently. The second is that there must be

some unusually strong force that is determining movements in the market which

alone can explain the wild swings it is witnessing.

41

The combination of these two factors is indeed a disconcerting

phenomenon, since if some force has the ability to lead the market and the

others can be taken along without much resistance, the market is in essence

being subjected to manipulation, even if not always consciously. Not surprisingly,

recent market developments have once more focussed attention on the volatility

that has come to characterise India's stock markets.

Movements in the Sensex during the two years have clearly been driven

by the behaviour of foreign institutional investors (FIIs), who were responsible for

net equity purchases of as much as $6.6 and $8.5 billion respectively in 2003

and 2004. These figures compare with a peak level of net purchases of $3.1

billion as far back as 1996 and net investments by FIIs of just $753 million in

2002. In sum, the sudden FII interest in Indian markets in the last two years

account for the two bouts of medium-term buoyancy that the Sensex recently

displayed.

At one level this influence of the FIIs is puzzling. The cumulative stock of

FII investment, totalling $30.3 billion at the end of 2004, amounted to just 8 per

cent of the $383.6 billion total market capitalisation on the Bombay Stock

Exchange. However, FII transactions were significant at the margin. Purchases

by FIIs of $31.17 billion between April and December 2004 amounted to around

38.4 per cent of the cumulative turnover of $83.13 billion in the market during that

period, whereas sales by FIIs amounted to 29.8 per cent of turnover..

A recent analysis by Parthaprathim Pal estimated that at the end of June

2004 FIIs controlled on average 21.6 per cent of shares in the Sensex

companies. Further, if we consider only free-floating shares, or shares normally

available for trading because they are not held by promoters, government or

strategic shareholders, the average FII holding rises to more than 36 per cent. In

a third of Sensex companies, FII holding of free-floating shares exceeded 40 per

cent of the total.

42

In 2004-05 portfolio investments in India accounted for about 62% of total

foreign investment in the country and at about 1.29% of GDP well exceeded the

current account deficit (0.95% of GDP). Foreign Institutional Investors’ (FIIs’)

investments accounted for about 97.5% of this. Ever since the opening of the

Indian equity markets to foreigners, FII investments have steadily grown from

about Rs. 2,600 crores in 1993 to over Rs.48,000 crores in 2005. At the end of

June 2006, the cumulative FII flows to India accounted for a little over 9% of the

Bombay Stock Exchange market capitalization. while it is generally held that

portfolio flows benefit the economies of recipient countries, policy-makers

worldwide have been more than a little uneasy about such investments. Often

referred to as “hot money”, they are known to stampede out at the slightest hint

of trouble in the host country leaving an economic wreck in their wake, like

Mexico in 1994. They have been blamed for exacerbating small economic

problems in a country by making large and concerted withdrawals at the first sign

of economic weakness.

They have also been held responsible for spreading financial crises –

causing contagion’ in international financial markets. International capital flows

and capital controls have emerged as important policy issues in the Indian

context as well. The danger of abrupt reversals and their destabilizing

consequences on equity and foreign exchange markets are always a concern

Foreign investment – both portfolio and direct varieties – can supplement

domestic savings and augment domestic investment without increasing the

foreign debt of the country.

Such investment constitutes non-debt creating financing instruments for

the current account deficits in the external balance of payments. Capital inflows

into the equity market give higher stock prices, lower cost of equity capital, and

encourage investment by Indian firms.

43

Foreign investors often help spur domestic reforms aimed at improving the

market design of the securities markets, and help strengthen corporate

governance

These benefits do require concomitant policy effort in terms of improving

financial regulation and corporate governance. The Reserve Bank of India (RBI)

has said 77% of the net annual foreign capital inflow into the country was for

2005-06 . This is the first time the central bank has defined volatility in foreign

capital flows with respect to India.

According to the RBI definition, volatile foreign capital inflows comprise

portfolio investment and short-term trade credit. This means RBI categorizes the

entire inflow of FII funds into the stock markets as volatile. Short-term trade credit

is defined as the credit extended to importers by suppliers of goods and services

from abroad.

According to the RBI definition, the share of such inflows in the net total foreign

capital inflows has been 76.3% in 2003-04 . The volatile component of the flow

had eased to 40.9% in 2004-05 but picked up momentum thereafter, as stock

markets have gathered steam.

In the current year, for instance, net FII inflow has been $2.39 billion,

according to Sebi data. However, despite it being clubbed as volatile, the

government has comfort room, as the total is less than 40% of total foreign

exchange reserves of the country, at present. Compared to this, inflow of FDI has

been much less.

The definition by the central bank is in reply to a question in the

Parliament about the share of volatile capital, as defined by RBI, in total foreign

capital inflow into India.

44

Further, according to estimates, the finance ministry and RBI had to spend

Rs 4,166.18 crore, about 0.2% of total fiscal deficit, to sterilise the impact of the

flow of foreign exchange into the country in 2005-06 . The sum was Rs 3,701.26

crore in 2004-05 .

In recent years, the country's stock of foreign exchange has shot up

largely through the surge in FII investment. The two instruments used to mop up

excess flow of dollars are the market stabilisation scheme (MSS) and the liquidity

adjustment facility (LAF).

While interest payments on MSS are borne by the government, “such

payments on account of LAF affect the government only indirectly through lower

net disposable income of RBI,†� the reply said.

3.2 Maximum FII flows in India

International

The classical capital asset pricing model (CAPM) predicts that, to

maximize risk adjusted returns, investors should hold a diversified market

portfolio of risky assets, irrespective of their country of residence. In practice,

however, the proportion of foreign assets in investors’ portfolios tends to be very

small, and there is a ‘home bias.’ There is evidence of the home bias decreasing

over the years. The share of foreign stocks in the equity portfolio of US investors,

for example, increased from an estimated 2 per cent in the late 1980s to about

10 per cent at the end of 1997, but is still far short of the 52 per cent of world

stock market capitalization accounted for by non-US stocks. A part of the home

bias is because of barriers to international investment.

The international CAPM predicts that individuals should hold equities from

around the world in proportion to market capitalizations. This is predicated on the

assumption that there are no barriers to international investment. In practice,

such barriers do exist, but they are falling overtime, including in India.

45

Empirically, the dominant explanation for international portfolio flows is in

terms of stock returns in dollar terms examine estimates of aggregate

international portfolio flows on a quarterly basis and find evidence of positive,

contemporaneous correlation between inflows and returns. International

investors may have a ‘cumulative informational disadvantage’ relative to local

investors. In response to some new information, local investors may trade in

stocks that results in a price change, and this price change in turn may lead to

international portfolio flows.

There is some evidence that the impact of international portfolio flows on

stock prices depends on whether such flows are ‘expected’ or ‘unexpected’ and

the composition of such investment. For Mexico during the late 1980s through

the crisis of 1993. evidence of unexpected inflows of 1 per cent of market

capitalization driving prices up by as much as 13 per cent.’ unexpected’, not the

‘expected’, inflows correlated with contemporaneous returns.

One of the worries stemming from the informational asymmetries between

foreign investors and domestic investors is the problem of herding and

overshooting. A positive feedback strategy leads to buys (sells) when prices are

rising (falling) and can lead to prices spiraling up (down) and overshooting the

equilibrium, a one-basis-point shock to international portfolio flows generates an

additional 1.5 basis point of additional inflow over the subsequent 45 days.

The data on daily cross-border flows for 44 countries from August 1, 1994

to December31, 1998 , the Asian crisis, and the Russian and long term capital

They find evidence that “All crisis episodes are clearly associated with a strong

attenuation of inflows in general, and of emerging market inflows in particular.

46

It appears that foreign investors held fast during the Mexican crisis, slightly

withdrew some resources in the midst of the Asian crisis, and were hardly fazed

by the Brazilian crisis. Interestingly, the LTCMfailure appears as the only shock

that is associated with strong foreign equity selling. Russia’s devaluation by itself

seems to have left little imprint on flows. By contrast, during theintracrisis

periods, the inflows came rapidly, at an annual rate of approximately 50 basis

points of market capitalization.”

This argument suggests that the gains. The Tequila crisis began with

Mexico’s sudden devaluation in December 1994 and continued through the

spring of 1995, the Asian crisis begins with the Thai devaluation in July 1997 and

continued through the spring of 1998,and the Russian/LTCM crisis occurred in

late summer/fall of 1998 with Russia devaluing in August 1998 andLTCM failing i

financial globalization may be smaller as compared with those predicted by the

ICAPM. This suggests that for India to fully capture these benefits, progress is

needed on issues of corporate governance and the risks of expropriation by the

offer of rationale in favor of capital controls.

FII net inflows in India

Using a monthly data-set for the period May 1993 to December 1999, the

FII net inflows were not only correlated with the return in Indian equity market but

was more likely the effect than the cause of the Indian equity market return. FIIs

did not appear to be at an informational disadvantage compared to domestic

investors in the Indian markets.

Furthermore, the Asian crisis marked a regime shift. In the post-Asian

crisis period, the return in the Indian equity market turned out to be the sole

driver of the FII inflow, while for the pre-Asian crisis period, other covariates

reflecting return in other competing markets were also correlated with FII net

inflow. explored the relationship of daily FII flows to the

47

Indian equity market for the period January, 1999 to May, 2002 with two types of

variables.

The first type included variables reflecting daily market return and its

volatility (representing risk) in domestic and international equity markets, based

on the BSE Sensex, S&P 500 and the MSCI WI, as well as measures of co-

movement of returns in these markets (the relevant betas). The second type of

variables, on the other hand, were essentially macroeconomic like daily return

son the Rupee-Dollar exchange rate, short-term interest rate and index of

industrial production(IIP); variables that are likely to affect foreign investors'

expectation about returns in the Indian equity market.

They distinguished among three kinds of daily FII flows, namely, FII flows

into the country or FII purchases, FII flows out of the country or FII sales, and the

net FII inflows into the country or FII net, and related these to the above

mentioned variables along with their past history over different time frames, like a

week or fortnight.

While, the dependence of net FII flows on daily return in the domestic

equity market at a lag, to be more specific) is suggestive of foreign investors'

return-chasing behavior, the recent history of market return and its volatility in

international and domestic stock markets have some significant effect as well.

However, while FII sale (and FII net inflow) is significantly affected by the

performance of the Indian equity market, FII purchase is not responsive to this

market performance.

. Global factor is the London Inter-bank Offered Rate (LIBOR), which

inversely related to FII inflows. Among domestic factors, lagged stock market

returns, rating downgrades and rupee depreciation affected FII flows adversely.

48

Policy implications that emerge from the studies are that a move towards a

more liberalized regime, in emerging market economies like India, should be

accompanied by further improvements in the regulatory system of the financial

sector.

To fully reap the benefits of capital market integration, in India, the prime

focus should be on improving investor confidence in the equity market so as to

strengthen the domestic investor base of the market, which in turn could act as a

built-in cushion against possible destabilizing effects of sudden reversal of

foreign inflows.“

Findings of several studies on FII flows emerging equity markets over the

world have shown the importance of financial market infrastructure such as the

market size, market liquidity, trading costs, information dissemination, and legal

mechanisms relating to property rights, etc. in attracting foreign portfolio

investments into the emerging markets.”

49

CHAPTER-4

FII’S IN INDIAN

MARKET

50

4.1 Foreign Institutional Investment

Overseas pension funds, mutual funds, investment trust, asset management

companies, nominee companies, banks, institutional portfolio managers,

university funds, endowments, foundations, charitable trusts, charitable societies,

a trustee or power of attorney holder incorporated or established outside India

proposing to make proprietary investments or investments on behalf of a broad-

based fund (that is, fund having more than 20 investors with no single investor

holding more than 10 per cent of the shares or units of the fund).

The primary market deals with the Initial public offerings (IPO) or sales of shares

by companies to the public for the first time. The recent IPO’s that took place in

BSE can be viewed. Once the IPO’s are completed all further transactions of the

sold shares take place in the secondary market, more commonly known as stock

markets or as bourses (jargon in finance).

The major stock exchanges in India are the BSE and the NSE..The National

Stock Exchange or NSE was incorporated in November 1992 as a tax-paying

company unlike other stock exchanges in the country. The NSE’s index is known

as S&P CNX Nifty which is a 50 stock index which covers almost 25 sectors of

the economy.

Bombay Stock Exchange Limited is the oldest stock exchange in Asia. The

Exchange has a nation-wide reach with a presence in 417 cities and towns of

India. The BSE’s index is the SENSEX which is a 30 stock index. The SENSEX

is an acronym for Sensitive index of the BSE. FII flows do have a great impact

even on the common man. The large inflows are often cited by politicians and

media as proof that India is a success story and that global investors are flocking

in their hordes.

51

It should be kept in mind that the so-called `global investor' can be very fickle. He

goes where he perceives profits. If the tide turns, he would be the first to flee with

the profits.

A sharp reversal of fund flows could result in economic and financial instability.

India was relatively immune to the Asian crisis in the mid-1990s as its integration

into the global financial market was not so strong. It may not be so lucky the next

time around. India also needs to focus on long-term flows in the form of foreign

direct investment to sustain the economic reform process

As sub-accounts:

A sub-account is generally the underlying fund on whose behalf the FII

invests. The following entities are eligible to be registered as sub-accounts:

Partnership firms, private companies, public companies, pension funds,

investment trusts, and individuals.

Domestic entity:

A domestic portfolio manager or a domestic asset management company shall

also be eligible to be registered as an FII to manage the funds of sub-accounts.

FIIs can register with SEBI under the following categories:

Regular FIIs – those required to invest not less than 70 per cent of their

investments in equity-related instruments and up to 30 per cent in non-equity

instruments.

.

52

Table 4.1 Trends in FII investment

Period Gross

purchases

(Rs. Mn.)

Gross

Sales

(Rs. Mn.)

Net

Investment

(Rs. Mn.)

Net

investment*

(US $ mn.)

Cumulative

Net

Invetment*

(US $ mn.)

1993-94 55,925 4,663 51,262 1,634 1,638

1994-95 76,310 28,348 47,963 1,528 3,167

1995-96 96,935 27,517 69,420 2,036 5,202

1996-97 155,539 69,794 85,745 2,432 7,634

1997-98 186,947 127,372 59,575 1,649 9,284

1998-99 161,150 176,994 -15,844 -386 8,898

1999-2000 568,555 467,335 101,219 2,339 11,237

2000-01 740,506 641,164 99,340 2,160 13,396

2001-02 499,200 411,650 87,552 1,846 15,242

2002-03 470,601 443,710 26,889 562 15,804

2003-04 1,448,575 990,940 457,645 9,949 25,754

Source : secondary data

Interpretation

It can be observed from the above table that the portfolio investment

inflows have always been on the increase. But the years 2001-02 and 2002-03

saw some reversal in the trend. From a net inflow of US $ 2.1 billion in 2000-01,

such inflows declined to US $ 1.8 billion in 2001-02, and further dropped to US $

0.562 billion in 2002-03.

53

The decline is because of the lower portfolio inflows, The decline witnessed a

sharp reversal in the year 2003-04. FIIs have made a net investment of US $

9969 million during this year registering a growth of 1670% over the previous

year, creating a record in the history of FII investment in India. Gross purchases

in this year registered a growth rate of 208% compared to the year before in

rupee terms. This trend continued in April 2004, only to suffer reversal again

during May and June 2004, when the net investment became negative.

Graph 4.1 Trends in FII Investments

Trends in FII investments

-200000

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

years

FII

In

vest

men

ts

54

55

Table 4.2 FII’s shareholding as of September 30, 2004

FIIs shareholding as a per cent

of total outstanding shares

Number of companies

0-1 234

1-5 74

5-10 51

10-15 46

15-20 32

20-25 20

25-30 6

30-35 0

35-40 2

40-45 1

45-50 1

50-55 1

55-60 0

60-65 1

Source: Secondary data

Interpretation

Average total traded value for all Nifty stocks is approximately 77 per cent of

the traded value of all stocks on the NSE. Nifty stocks represent about 61 per

cent of the total market capitalization as on August 31, 2004.

56

Graph 4.2 FIIs shareholding as of September

FII's share holdings in 2004

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

Months

Sh

areh

old

ing

s

0

50

100

150

200

250

No

of

com

pan

ies

Table 4.3 t test results

N Mean Standard deviation

t value

Nifty Companies

50 16.9278 12.8318 6.934#

Non-Nifty Companies

419 4.1476 6.6009

# p < 0.05

Source: Secondary data

Interpretation

Analysis was done to see if Nifty and non Nifty companies differe in their FII

investments. Thus we can conclude t test the calculated value is significant at

5% level of significance

57

Ho : there is no significance difference between Nifty and non Nifty companies

in their FII investments

H1: There is significance difference between Nifty and non Nifty companies in

their FII investments

There fore Null hypothesis is rejected

Table 4.4 Shareholding Pattern in Nifty Companies as of September 2004

Companies FIIs Shareholding

(in mn.)

Total outstanding

shares

(in mn.)

FIIs Shareholding

as a % of total

outstanding

shares

NIFTY 3,227 23,285 13.85

Non-NIFTY 1,508 35,060 4.30

Total 4,735 58,345 8.12

Source: Secondary data

Interpretation

The table above shows that the FIIs investment is certainly more

concentrated in the Nifty companies than in Non-Nifty companies. The FIIs

shareholding is around 13.85 per cent in Nifty companies as against 4.30 per

cent in the Non-Nifty companies. This analysis is not complete, though the

shareholding of the FIIs as a per cent of the total outstanding shares of the

company makes it comparable with similar figures for other companies, it does

not indicate the amount of FIIs investment in each of these companies in relation

to others.

58

This is because a mere comparison of the number of shares held by FIIs

is meaningless as the market price per share varies across companies and it

takes different quantum of money to acquire the same number of shares in

different companies. Hence, this analysis is further extended to include the

monetary value of the FIIs investment as of September 30, 2004.

Graph 4.4 Shareholding Pattern in Nifty Companies as of September

2004

0

10000

20000

30000

40000

50000

60000

companies

total outing shares

FII share holdings

50000-60000

40000-50000

30000-40000

20000-30000

10000-20000

0-10000

59

Table 4.5 Value of FIIs Investment

Category FIIs Shareholding

(Rs. mn.)

FIIs Shareholding as a

percentage of the total

value

Nifty 1,328,556 85.16

Non-Nifty 231,520 14.84

Total 1,560,076 100

Source: secondary

Interpretation

The shareholding of FIIs is analyzed in terms of the market value of their

investment as of September 30, 2004, about 85 per cent of the total value of their

investment is held in Nifty companies and only about 15 per cent is in Non-Nifty

companies. A separate analysis of the Nifty and Non-Nifty companies bears

evidence to this fact. The investment is about 14 and 12 per cent respectively.

50 per cent of the total market value of the FIIs investment is only in 6 companies

namely Infosys Technologies (13.87%), Reliance Industries (12.44%), ICICI

Bank (7.51), HDFC (7.05), ONGC (5.25%) and Satyam (4.88). The total value of

the FIIs investment in these companies is around Rs.677,516 million .

60

Graph 4.5 Value of FIIs Investment

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

FII's shareholding

category

Value of FII Investment

1400000-1600000

1200000-1400000

1000000-1200000

800000-1000000

600000-800000

400000-600000

200000-400000

0-200000

Table 4.6 Cap and Gap Analysis of FIIs Investment

Category Total

outstanding

shares

Permissible

Investment

for FIIs (Cap)

FIIs

shareholding

Gap

Available

for

Investment

All

Companies

58,345 17,123 4,734 12,389

Nifty 23,285 7.937 3,227 4,711

Non-Nifty 35,060 9,186 1,508 7,678

Source: secondary data

61

Interpretation

The percentage of the investment gap in case of Nifty companies is

around 59 and it is 84 for the Non-Nifty companies. The total gap in respect of all

the companies works out to 72 per cent. FIIs investments in Nifty companies is

higher than in Non-Nifty companies, both in terms of number of shares held by

them and the market value of these shares. FIIs investment cap is not uniformly

the same figure for all the companies

Graph 4.6 Cap and Gap Analysis of FIIs Investment

Cap & gap analysis of FII

0

10000

20000

30000

40000

50000

60000

70000

cap/Gap available for investment

tota

l o

uti

ng

sh

are

s

Table 4.7 Gap in Market Value

Category Gap Available for

Investment

(in mn.number of shares)

Gap in Market Value#

(Rs. in mn.)

All Companies 12,389 2,711,522

Nifty 4,711 1,338,886

Non-Nifty 7,678 1,372,637

Source: secondary data

Interpretation

62

The above table shows the number of shares available for further

investment by FIIs is less in Nifty companies than Non-Nifty companies, in terms

of value the difference is not very wide as the average market price per share of

the Nifty category, is very much higher than that of the Non-Nifty category.

The top 5 companies where the gap is at the maximum in Nifty category of

companies are Bharti Televentures, Reliance Industries, ONGC, Hindustan Lever

and Wipro. In the Non-Nifty companies the top 5 companies are Mphais BFL,

Neyveli Lignite, LIC Housing Finance, Tata Teleservices(Maharastra) and

Himachal Futuristic.

Graph 4.7 Gap in Market Value

Gap analysis of FII's at market value

0

1000000

2000000

3000000

4000000

5000000

6000000

gap in market value

Table 4.8 Trading Strategy of FIIs

63

Period Gross

Purchases

(Rs. Crores)

Gross Sales

(Rs. Crores)

Ratio of Gross

Sales/Gross

Purchases(per

cent)

January 2004 16830.20 13653.50 81

February 2004 14952.10 12555.00 84

March 2004 17238.20 11633.90 67

April 2004 19691.50 12053.30 61

May 2004 15531.60 18778.10 121

June 2004 10633.50 10116.80 95

July 2004 11096.20 10182.80 92

August 2004 12594.80 9702.30 77

September

2004

12385.10 9999.80 81

Source: secondary

Interpretation

This Table Shows the Trading strategy of FII from January 2004 o September

2004 through gross purchases & gross SalesGraph

Graph4.8Trading strategy of FII’s

Trading Strategy of FII's

0

20000

40000

60000

80000

100000

120000

140000

160000

64

TABLE 4.9 FII Net Investments in different years

Year Jan Feb Mar

1996 138 1613 1089

1997 340 424 484

1998 -375 628 472

1999 370 384 204

2000 184 2727 1360

2001 3872 1574 2265

2002 378 2024 484

2003 1088 433 283

2004 2483 3183 8812

2005 1324 7484 7888

2006 6177 7600 1800

Source: secondary data

Interpretation

The above table shows the FII net Investments and compared that to

monthly performance of the S&P Nifty 50 index there is lot of difference in

each month

Graph 4.9 FII Net Investments

65

-2000

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

FII net investments in each year

Table 4.10 Gap Available for investments

Category Total

outstandi

ng

Shares

Permissible

Investment

for

FIIs (Cap)

FIIs shareholding Gap

Available for

Investment

All

Companies

58,345 17,123 4,734 12,389

66

NIFTY 23,285 7.937 3,227 4,711

Source: secondary data

Interpretation

The above table shows the percentage of the investment gap in case of

NIFTY companies is around 59 and is 84 for the Non-NIFTY companies. The

total gap in respect of all the companies works out to 72 per cent. where it is

brought out that the FIIs investments in NIFTY companies is higher than in Non-

NIFTY companies

Graph 4.10 Gap Available for investments

67

Gap available for investment

0 10000 20000 30000 40000 50000 60000 70000

1

2

3

4

5

6

7

Table 4.9 Gap Available forInvestment

Table 4.9 FIIs shareholdingInvestment for

Table 4.9 PermissibleInvestment for

Table 4.9 Total outstandingShares

Table 4.9 Category

68

Table 4.11 Gap Analysis of FII’s Investment at Market Value

Category Gap Available for

Investment

(in mn.number of

shares)

Gap in Market

Value#

(Rs. in mn.)

All Companies 12,389 2,711,522

NIFTY 4,711 1,338,886

Non-NIFTY 7,678 1,372,637

Source: Secondary data

Interpretation

In the above table number of shares available for further investment by

FII’s is less in NIFTY companies

Graph 4.11 Gap Analysis of FIIs Investment at Market Value

69

gap in market value

Category

All Companies

NIFTY

Non-NIFTY

5.1FINDINGS

70

India opened its stock markets to foreign investors in September 1992

It as received considerable amount of portfolio investment from foreigners

in the form of Foreign Institutional Investor’s (FII) investment in equities

FII’s have been permitted to purchase shares/convertible debentures of an

Indian company through offer / private placement.

Eligibility to obtain an FII license a fund must be "broad-based" -that is, it

must have at least twenty individual investors with no single investor holding

more than 10 percent of the funds outstanding shares.

FII’s are also permitted to trade in all exchange traded derivative contracts

subject to certain limits.

FII’s are not permitted to invest in Print Media Sector through FDI or PIS

routes. Investment by FII requires prior approval of Government of India.

FII’s have been permitted to purchase shares/convertible debentures of an

Indian company through offer / private placement. It is clarified that a FII

may invest in a particular issue of an Indian company

.

71

5.2 SUGGESTIONS

A foreign investor that meets certain eligibility criteria must obtain approval

as an FII from both SEBI and the Reserve Bank of India, and must renew

its license every five years.

If the FII’s investments could concentrate in a large number of companies

the market value will raise

FII must be increased in india

72

5.3 CONCLUSION

The foreign institutional investments in India after the initiation of

economic reforms in the early 1990s, the movement of foreign capital flow

increased very substantially. This increase in capital movement could have a

very significant impact on the domestic real economy.

There is great need to monitor the behavior of these flows so as to

minimize possible adverse impacts on the real economy. For this purpose, we

need to be aware of the determinants of foreign capital, rather than what

influences this capital to cross borders. The present study examines the

determinants of foreign institutional investments in India.

Foreign institutional investors (FII’s) were net sellers from November 1997

through January 1998. The outflow, prompted by the economic and currency

crisis in Asia and some volatility in the Indian rupee, was modest compared to

the roughly dols 9 billion which has been invested in India by FII’s since 1992.

Foreign institutional investors (FII’s) were net sellers from November 1997

through January 1998. The outflow, prompted by the economic and currency

crisis in Asia and some volatility in the Indian rupee, was modest compared to

the roughly dolls 9 billion which has been invested in India by FII’s since 1992.

Every year since FII’s were allowed to participate in the Indian market, FII

net inflows into India have been positive, except for 1998-99. This reflects the

strong economic fundamentals of the country, as well as the confidence of the

foreign investors in the growth with stability of the Indian market. The year 2003

marked a watershed in FII investment in India. FII’s started the year 2003 in a big

way by investing Rs. 985 crore in January itself.

73

BIBLIOGRAPHY

REFERENCES

Agarwal, R. N. 1997. “Foreign Portfolio Investment in Some Developing

Countries

Chakrabarti Agarwal, R. N. 1997. “Foreign Portfolio Investment in Some

Developing Countries

, Rajesh. 2001. “FII Flows to India,

Journals

Trivedi, Pushpa, and Abhilash Nair. 2003. “Determinants of FII Investment

Inflow to India.”

Icfai pushpa Trivedi and Abihilash Nair

Web sites

www.business Line .com

www.google.com

www.economic times.com

www.indiatines.com

74