Wire Transfer Form-5

8/3/2019 Wire Transfer Form-5

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INTRODUCTION

Foreign Investment refers to Investments made by residents of a country in

financial assets and production process of another country. It can affect the factor

productivity of the recipient country and can also affect the balance of payments. In

developing countries, there is a great need of foreign capital, not only to increase their

productivity of labor but also to help to build the foreign exchange reserves to meet the

trade deficit.

It can come in two forms: Foreign Direct Investment (FDI) and Foreign Portfolio

Investment. Foreign Direct Investment involves in the direct production activity and also

of medium to long term nature. But the foreign portfolio investment is a short term

investment mostly in the financial markets and it consists of Foreign Institutional

Investment (FII).

India being a capital scarce country, has taken lot of measures to attract foreign

investment since the beginning of reforms in 1991. Till the end of January 2003, it was

able to attract a total foreign investment of around US $48 billions out of which US $ 23

billions is in the form of Foreign Portfolio Investment. Foreign Institutional Investment

consists of around US $ 12 billions in the total foreign investment. This shows the

importance of FII in the overall foreign investment program.

As India is in the process of liberalizing the capital account, it would have

significant impact on the foreign investments and particularly on the FII, as this would

affect the 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 we can frame

our policies to influence the variables which drive-in foreign investment. Also FII has

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been subject of intense discussion, as it is held responsible for intensifying currency crisis

in 1990s elsewhere.

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 Investments (FII) in equities. In order to trade in Indian

equity markets, foreign corporations need to register with the Securities Exchange Board

of India (SEBI) as Foreign Institutional Investors (FII).

SEBIs definition of Foreign Institutional Investors 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.

One who proposes to invest their proprietary funds or on behalf of broad based

funds or of foreign corporate and individual and belong to any of the under given

categories can be registered for FII. Foreign Institutional Investors (FIIs) including

institutions such as Pension Funds. Mutual Funds, Investment Trusts, Asset Management

or their power of attorney holders (providing discretionary and non-discretionary

portfolio management services) are invite to invest in all the securities traded on the

primary and secondary markets, including the equity and other securities /instruments of

companies which are listed/to be listed on the stock exchanges in India including the

OTC Exchange of India. These would include shares, debentures, warrants, and the

schemes floated by domestic Mutual Funds. To be eligible to do so, the FIIs would be

required to obtain registration with securities and Exchange Board of India (SEBI) FIIs

are also require to file with SEBI another application addressed to RBI for seeking

various permissions under FERA.

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SEBI shall for granting registration to the FII, take into account the track record

of the FII, its professional competence, financial soundness, experience and such other

relevant criteria. FIIs seeking registration with /SEBI should hold a registration from the

securities commission, or the regulatory organization for the stock market in its own

country of domicile/incorporation.

SEBIs registration and RBIs general permission under FERA to an FII will be

for five years renewable for similar five year periods later on. RBIs general permission

under FERA would enable the registered FII to buy, sell and realize capital gains on

investments made through initial corpus remitted to India, subscribe/renounce rights

offerings of shares, invest on all recognized stock exchanges through a designated bank

branch, and to appoint a domestic custodian for custody of investments held.

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The policy framework for permitting FII investment was provided under the

Government of India guidelines vide Press Note date September 14, 1992. The

guidelines formulated in this Regard were as follows:

Foreign Institutional Investors (FIIs) including institutions such as Pension Funds,

Mutual Funds, Investment Trusts, Asset Management Companies, Nominee

Companies and Incorporated/Institutional Portfolio Managers or their power of

attorney holders (providing discretionary and non-discretionary portfolio

management services) would be welcome to make investments under these

guidelines.

FIIs would be welcome to invest in all the securities traded on the Primary and

Secondary markets, including the equity and other securities/instruments of

companies which are listed/to be listed on the Stock Exchanges in India including the

OTC Exchange of India. These would include shares, debentures, warrants, and the

schemes floated by domestic Mutual Funds. Government would even like to add

further categories of securities later from time to time.

FIIs would be required to obtain an initial registration with Securities and Exchange

Board of India (SEBI), the nodal regulatory agency for securities markets, before any

investment is made by them in the Securities of companies listed on the Stock

Exchanges in India, in accordance with these guidelines. Nominee companies,

affiliates and subsidiary companies of a FII would be treated as separate FIIs for

registration, and may seek separate registration with SEBI.

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Since there were foreign exchange controls in force, for various permissions under

exchange control, along with their application for initial registration, FIIs were also

supposed to file with SEBI another application addressed to RBI for seeking various

permissions under FERA, in a format that would be specified by RBI for the purpose.

RBI's general permission would be obtained by SEBI before granting initial

registration and RBI's FERA permission together by SEBI, under a single window

approach.

For granting registration to the FII, SEBI should take into account the track record of

the FII, its professional competence, financial soundness, experience and such other

criteria that may be considered by SEBI to be relevant. Besides, FII seeking initial

registration with SEBI were be required to hold a registration from the Securities

Commission, or the regulatory organization for the stock market in the country of

domicile/incorporation of the FII.

SEBI's initial registration would be valid for five years. RBI's general permission

under FERA to the FII would also hold good for five years. Both would be renewable

for similar five year periods later on.

RBI's general permission under FERA would enable the registered FII to buy, sell

and realize capital gains on investments made through initial corpus remitted to India,

subscribe/renounce rights offerings of shares, invest on all recognized stock

exchanges through a designated bank branch, and to appoint a domestic Custodian for

custody of investments held.

There would be no restriction on the volume of investment minimum or maximum-

for the purpose of entry of FIIs, in the primary/secondary market. Also, there would

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be no lock-in period prescribed for the purposes of such investments made by FIIs. It

was expected that the differential in the rates of taxation of the long term capital gains

and short term capital gains would automatically induce the FIIs to retain their

investments as long term investments.

Portfolio investments in primary or secondary markets were subject to a ceiling of

30% of issued share capital for the total holdings of all registered FIIs, in any one

company. The ceiling was made applicable to all holdings taking into account the

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

The holding of a single FII in any company would also be subject to a ceiling of 10%

of total issued capital. For this purpose, the holdings of an FII group would be

counted as holdings of a single FII.

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The general permission from RBI shall also enable the FII to:

1. Open foreign currency denominated account(s) in a designated bank. (These can

even be more than one account in the same bank branch each designated in

difference foreign currencies, if it is so required by FII for its operational

purposes.

2. Open a special non-resident rupee account to which could be credited all receipts

from the capital inflows, sale proceeds of shares, dividends and interests.

3. Transfer sums from the foreign currency accounts to the rupee account and vice-

versa, at the market rates of exchanges.

4. Make investments in the securities in India out of the balances in the rupee

account.

5. Transfer repatriate (after tax) proceeds from the rupee account to the foreign

currency accounts.

6. Repatriate the capital, capital gains, dividends, incomes received by way of

interest , etc, and any compensation received towards sale/renouncement of rights

offerings of shares subject to the designated branch of bank/the custodian being

authorized to deduct withholding tax on capital gains and arranging to pay such

tax remitting the net proceeds at market rates of exchange.

7. Register FIIs holding without any further clearance under FERA.

There is no restriction on the volume of investment minimum or maximum for the

purposes of entry of FIIs, in the primary/secondary market. Also, there is no lock in

period for the purposes of such investments made by FIIs.

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Portfolio investments in primary or secondary markets will be subject to a ceiling

of 24% of issued share capital for the total holdings of all registered FIIs, in any one

company. The ceiling would apply to all holdings taking into account the conversions out

of the fully and partly convertible debentures issued by the company. The holding of a

single FII in any company would also be subject to a ceiling of 5%of total issued capital.

For this purposes, the holdings of a FII ground will be counted as holdings of a single FII.

The maximum holding of 25% for all non-resident portfolio investments,

including those of the registered FIIs, will also include NRI corporate and non-corporate

investments, but will not include the following:

1. Foreign investments under financial collaborations (direct foreign investments),

which are permitted upto51% in all priority areas.

2. Investments by FIIs through the following alternative routes:

a. Off shores single/regional Funds.

b. Global Depository Receipts.

c. Euro convertibles.

Disinvestments will be allowed only through stock exchanges in India, including

the OTC Exchange. In exceptional cases, SEBI may permit sales other than through stock

exchanges, provided the sale price is not significantly different from the stock market

quotations.

All secondary market operations would be only through the recognized

intermediaries on the Indian Stock Exchange, including OTC Exchange of India. A

registered FII will not engage in any short selling in securities and to take delivery of

purchased and give delivery of sold securities.

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A registered FII can appoint as custodian an agency approved by SEVI to act as a

custodian of securities and for confirmation of transactions in securities, settlement of

purchase and sale, and for information reporting. Such custodian shall establish separate

accounts for detailing on a daily basis the investment capital utilization and securities

held by each FII for which it is acting as custodian. The custodian will report to the RBI

and /SEBI semi annually as part of its disclosure and reporting guidelines.

The RBI shall make available to the designated bank branches a list of companies where

no investment will be allowed on the basis of the upper prescribed ceiling of 24% having

reached under the portfolio investment scheme.

The RBI may at any time request by any order registered FII to submit

information regarding the r cords of utilization of the inward remittances of investment

capital and the statement of securities transactions. RBI and/or SEBI may also at any time

conduct a direct inspection of the records and accounting of books of a registered FII.

FIIs investing under this scheme will benefit from a confessional tax regime of a flat rate

of 20% on dividend and interest income and a tax rate of 10% on long term (one year of

more) capital gains.

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SEBI Regulations for FII

Investment by FIIs is regulated under SEBI (FII) regulations, 1995 and Regulations 5(2)

of FEMA Notification No. dated May 3, 2000.

SEBI acts as the nodal point in the entire process of FII registration. FIIs are

required to apply to SEBI in a common application form in duplicate. A copy of the

application form is sent by SEBI to RBI along with their No Objection so as to enable

RBI to grant necessary permission under FEMA. RBI approval under FEMA enables an

FII to buy/sell securities on stock exchanges and open foreign currency and Indian rupee

accounts with a designated bank branch. FIIs are required to allocate their investment

between equity and debt instruments in the ratio of 70:30. However, it is also possible for

an FII to declare it a 100% debt FII in which case it can make its entire investment in

debt instruments.

FIIs can invest in listed and unlisted securities including shares, debt instruments,

dated government securities and Treasury Bills. No individual FII/sub-account can

acquire more than 10% of the paid up capital of an Indian company. All FIIs and their

sub-accounts taken together cannot acquire more than 24% of the paid up capital of an

Indian company. Indian companies can raise the above mentioned 24% ceiling to the

Sectoral Cap/ Statutory Ceiling as applicable by passing a resolution by its Board of

Directors followed by passing a Special Resolution to that effect by its General body in

terms of Press Release dated September 20, 2001 and FEMA notification No.45 dated

September 20,2001.

Presence of Sectoral Cap / Statutory ceiling means that foreign investment from

all sources cannot exceed a specified level. A company to which no sectoral cap/statutory

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ceiling is applicable can raise the limit of permissible FII investment to 100% of the paid

up capital. A company to which a 49% cap is applicable can raise the limit of permissible

FII investment to 49% and if there is an existing foreign direct investment of 15%,

possible FII investment can only be up to 34%.

No permission from RBI is needed so long as the FIIs purchase and sell on

recognized stock exchange. All non-stock exchange sales/purchases require RBI

permission.

In order to ensure that the sectoral / statutory ceiling on foreign investment in a

company are not violated due to investment by FIIs, RBI monitors these ceilings for the

companies in respect of which sectoral caps /statutory ceiling have been indicated by

Government of India.

When the total holdings of FIIs reaches within 2% of the applicable limit, reserve

bank issues a notice to all concerned that any further purchases of the shares of the said

Company requires prior approval of RBI. FIIs can avail of the Forward Cover Facility

from the Authorized Dealer subject to certain conditions. High Net Worth individuals/

foreign corporate can invest through SEBI Registered FIIs subject to a sub-limit of 5%

each within the aggregated limit of 24%.

Registered Foreign Institutional Investors (FIIs) are allowed to trade in all

exchange traded derivative contracts approved by SEBI from time to time subject to the

limits prescribed by SEBI.

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Sub-accounts

Those funds or portfolios, established outside India, whether incorporated or not and

corporate and individuals, n whose behalf investments are proposed to be made in India

by a foreign Institutional Investor. It may however be noted that Non-resident Indians and

overseas Corporate Bodies (OCB) are not entitled to get registered as sub-account.

There are two categories of sub-accounts:

Broad-based / proprietary sub-accounts which are allowed to individually invest up to

10% of the total issued capital. Foreign Corporate and foreign individuals Investment by

each sub-account in this category should not exceed 5% of the issued capital. A broad

based fund is a fund which has at least 20 shareholders and no single investor holds more

than 10% of shares and units of the fund. In case, if any investor holds more than 10% of

shares or units of the fund, then it in turn should be a broad-based.

The proprietary funds of the FII shall not be invested through a broad-based fund.

A proprietary Fund is a fund wherein the ownership of the funds is that of the Foreign

Institutional Investor. A single FII may have many customers, with sub-accounts. The FII

may be prominent advisor shaping the decisions of all these sub-accounts. This may lead

to difficulties if there is herding that is a situation where all these sub-accounts

behave in correlated way. In order to address this, the existing limit of 10 percent holding

in any one firm by any one FII may be extended to cover the sum of the holding s of any

one FII and all such sub-accounts coming under that FII which have common beneficial

ownership as the FII. The onus for establishing that a sub-account does not have a

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common beneficial ownership will lie with the FII. This requirement may be phased in

over a five year period, with a limit of 20 percent by December 2005, 18 percent by 2006,

16 percent by 2007, 14 percent by 2008, 12 percent by 2009 and 10 percent by 2010.

The market integrity concern may force a rethinking of some aspects of FIIs sub-

account policy. Since the sub-accounts are mostly likely to be client funds, there is force

in the argument of banning sub-accounts altogether. However, with over 90% of FII

investment in India through the account route, such an outright ban will be unsettling for

the market. A possible alternative to address the market integrity concerns is that some

entities, which do not have reputation risk or are unregulated, may be prohibited to be

registered as sub-accounts. Such entities may be given sufficient time to wind up the

position.

The stability of foreign investment in India will be enhanced if FIIs are able to

switch between equity and debt instruments in India, depending on their view about

future equity returns. Greater flexibility for FIIs to participate in the bond market will

induce more balanced strategies, and mixing of equity and debt. Such FII investment in

debt will indeed be apart of Indias external debt, but with an important difference,

namely that such debt will be in domestic currency. Keeping this important difference in

mind, there is merit in progressive liberalization with amendment of the quantitative

restriction upon debt flows to a cap on the annual flow from the present ceiling on the

aggregate portfolio value.

Participatory notes

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Participatory notes (PNs) are instruments sold by FIIs registered in the country to

clients abroad that are derivatives linked to an underlying security traded in the domestic

market. These derivatives not only allow the foreign clients of the FIIs to earn incomes

from trading in the domestic market, but to trade these notes themselves in international

markets. These instruments are sold to the clients outside the country. These participatory

notes are also area of concern because there is no regulating body which holds the exact

identity of the PN holder. This is the basic issue where the clients from abroad can go for

speculation leading grievous losses to the domestic markets while providing profits for

the clients. Participatory notes were issued for the foreign institutional investors to invest

in the local market so that foreign investment can be brought to the domestic markets.

But it had become a concern out of volatile or speculative nature. By the end of August

1995, the value of equity and debt instruments underlying participatory notes that had

been issued by FIIs amounted to Rs 78,390 crore or 47 percent of cumulative net FII

investment. Through these routes, entities not expected to play a role in the Indian market

can have a significant influence on market movements.

Hedge funds

Hedge funs, which are private investment vehicles for wealthy individuals or

Institutional investors have been in existence for over half a century,. They however have

littler to do with hedging or eliminating risks arising from an underlying portfolio

position. Hedge funds constitute an alternative to mutual funds in terms of being a

vehicle for fund management. Regulation of mutual funds, motivated by the need to

protect small investors, induces significant costs of regulation. Hedge funds are prevented

from accessing small investors, and are free from this regulation. They are able to engage

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in a wider array of trading strategies, and contractual structures, as compared with mutual

funds. They are the preserve of sophisticated investors who are able to take care of their

own interests, and not rely on an intrusive regulatory of mutual funds are substantial,

hedge funds would yield superior returns.

Albert Winslow Jones is credited with forming one of the first hedge funds in

1749. However, they came into prominence in 1966, when an article in Fortune reported

how Jones funds had substantially higher returns that other mutual funds. A concept of a

domestic Hedge Fund may be create through appropriate SEBI regulations, to play a

comparable role in the market based on purely rupee investments. SEBI has suggested a

policy framework for hedge funds in India based on transparent and regulated access with

abundant caution. However, there are certain concerns, which warrant that, for the time

being, these funds may not be registered in India. There is merit in closely watching the

regulatory development with regard to hedge funds in the US and elsewhere, including

Europe and formulating policy on the basis of experiences of these countries at a later

date. Only those funds which are otherwise eligible to be registered as FIIs/sub accounts

under SEBI (FIIs) Regulations, 1995 may be continued to be allowed.

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Classification of investors:

The kind of information required and the policy to be formulated depends on the kind of

investors. There are two kinds of investors, namely:

1. Individual investor.

2. Institutional investors

Individual Investor find it difficult their portfolio investment policies, as they will busy

with their business, family and social lives and do not have time to conduct research to

decide in which shares their hard earned savings have to be invested. Therefore, they tend

to adopt hit and run policy.

The institutional investors have both time and resource to dig out the necessary

information to formulate their investment portfolio. They can afford to employ skilled

economists, financial analysts and investment managers. They can acquire all the

necessary financial information and in case inadequacy, they can also approach the

concerned organisation to make enquires and collect further information. An institutional

investor can have continuous review and scrutiny of its investment portfolio. In case of

adverse market conditions, they will be efficient to dispose off the securities. The

institutional investors own a major part of corporate securities and most of them into

buying and selling the securities as a part of their main policies of optimum utilisation of

their cash resources.

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Equity Market an Introduction

Equity: stocks also know as Equities, are shares in a company. It is the certificate of

ownership of incorporation. In simple terms when you invest in a companys stock or buy

its share, you own part of a company. Thus as stockholder, you share portion of the profit

the company may make, as well as portion of the loss a company may take. As the

company keeps doing better, your stock will increase in value and yield higher dividends.

Equity market or stock market: is a system through which a company shares are

traded. The equity market offers investors an opportunity to participate in a companys

success through an increase in its stock price.

Investment: An investment is the commitment of funds made in the expectation of some

positive rate of return. If the investment is properly undertaken the return will be

commensurate with the risk the investor assumes. The term investment or investing is a

word of many meanings; there are three concepts of investment Economic investment,

Business Investment and Financial investment.

The Investment portfolio: Refers to the various assets of an investor, which are to be

considered as a unit. An investment portfolio is not merely a collection of unrelated

assets but a carefully blended asset combination with as unified framework. The investor

takes decision with regards to his wealth position from the portfolio as a whole.

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EVOLUTION AND PRESENT SCENARIO OF THE INDIAN

MARKET :

SECURITIES MARKET:

Securities markets are market in financial assets or instruments are these are

represented as I.O.U. (I owe YOU) in financial form. These are issued by business

organizations, corporate units and the governments, central or state. Public sector

undertakings also issue these securities. These securities are used to finance their

investment and current expenditure. These are thus sources of funds to the issuers.

Securities are the claims on money and like promissory notes of I.O.U securities

are source of fund for companies, government etc. the external sources of funds of the

companies are as follows:

i) LONG TERM FUNDS:

a) Ownership capital-equity and preference capital

b) Debt capital-debentures and the long borrowings in the form of deposit

from public or credit limits or advances from banks and financial

institutions.

ii) SHORT TERM FUNDS:

a) Borrowings from banks

b) Trade credit and suppliers credit

The security market can be again classified into:

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1) Primary Market: A primary market is a market where securities are issued

to the public for the first time. New issues are dealt within this market. The

new issues market has three functions to perform organization underwriting

and distribution. There are three ways by which a company may raise capital

in primary market.

i) Public issue

ii) Rights issue

iii) Private placements

Intermediaries in the primary market ate merchant bankers, collecting

bankers, registers and transfer agents, broker underwriters, advertising agencies,

printers, sub-brokers and solicitors and mailing agents

2) Secondary market: secondary market is a market where securities, which

have already issued in the primary market, are traded. This market consists of

all stock exchanges recognized by government of India, and is regulated under

the securities contract (regulations) act 1956. The BSE is the principle stock

exchange in India. Which sets the tone of the other stock markets?

Intermediaries in secondary market are brokers, jobbers, dealers, arbitrators,

investment advisors, portfolio managers, and sub-brokers.

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Difference between the primary market and the secondary market

In the primary market, securities are offered to public for subscription for the purpose of

raising capital or fund. Secondary market is an equity-trading avenue in which already

existing/pre-issued securities are traded amongst investors. secondary market could be

either auction or dealer market. While stock exchange is the part of an auction market,

over-the counter (OTC) is a part of the dealer market.

EVOLUTION OF INDIAN STOCK MARKET:

The origin of stock market in India goes back to the late part of the 18 th century.

The earliest security dealing was transactions in loan securities of the east India

Company, the dominant institution of those days. Corporate shares came to the picture by

1830s and assumed significance with the enactment of companies Act in 1850. The

introduction of limited liability marked the beginning of the era of modern joint stock

enterprises. The American civil war followed this in 1860-65. However the bubble burst

with the end of the civil war and a disastrous slump followed. The tremendous soil

pressure on the brokers led to their forming an informal association which later gave birth

to the native share and stock brokers association, was formed in 1982, which later

came to be known as Bombay Stock Exchange in 1887.

The cotton textile industry that contributed a lot in the establishment of the

Bombay stock exchange was also the prime factor in the development of the Ahmadabad

as a center for dealing in stocks and share. As new cotton textile mills floated and the

volume of business grew, the Ahmadabad share and stock brokers Association was

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formed in 1982, which later came to be known as the Ahmadabad stock exchange.

The next stock exchange was established in Calcutta in 1908. the industries that

contributed o its birth and subsequent development were jute, coal, and mining. Like the

Bombay stock exchange, it was born out of crisis when the boom of 1904-08 broke and a

need was felt for an organized body for mutual protection of brokers and safety of the

trade.

With the World War I, all imports into India ceased and the Indian manufacturers

were faced with a boom. The three stock exchanges flourished during the period of

prosperity. However, the boom also led to the formation of many rival stock exchanges.

The World War II also resulted in boom and mushroom growth of the stock exchange.

However, many of them perished during the slump that followed.

Most of the stock exchanges languished till 1956 when the government came out

with a comprehensive legislation called the Securities contract (Regulation) Act, to

regulate the functioning of the stock exchanges, this legislation made it mandatory on the

part of the stock exchanges to secure legislation from the central government. Only the

established stock exchanges in Mumbai, Calcutta, Delhi, Hyderabad, and Indore were

recognized under the Act, more sock exchanges were recognized subsequently.

At present the stock market consists of 23 regional stock exchanges and two

national stock exchanges known as NSE and OTCEI (Over the Counter Exchange of

India).

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Stock Market Milestones

1 1875 BSE established as the native share and stock brokers association

2 1956 BSE became the first stock exchange to be recognized under the securities

contract Act.

3 1993 NSE recognised as a Stock exchange

4 2000commencement of Internet Treading at NSE

5 2000 NSE commences derivatives trading.

6 2001 BSE commences derivatives trading.

7 2001-2009 continuous growth and innovation in Trading

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Factors determining the market movements

The supply and demand for securities largely determine whether the market is the

Bull or Bear phase. Forces like investor Psychology, government involvement in the

economy and changes in economic activity also drive the market up or down. These

combine to make investor bid higher or lower price for stocks.

Understanding Financial Markets

The financial markets can broadly be divided into:

1 Money Market

2 Capital Market

Money Market: Money market for debt securities that pay off in the short term usually

less than one year, for example the market for 90-days treasury bills. This market

encompasses the trading and issuance of short-term non-equity debt instrument including

treasury bills, commercial papers, bankers acceptance, certificate of deposits, etc.

Capital Market: capital market is a market for long-term debt and equity shares. In this

market the capital funds comprising of both equity and debt are issued and traded. This

also includes private placement sources of debt and equity as well as organized markets

like stock exchanges. Capital market can be further divided in to:

Primary Market

Secondary Market

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Primary Market: An issuer/company enters the Primary market to raise capital. They

issue new securities in exchange for cash from an investor (buyer). If the issuer is selling

for the first time these are referred to as Initial public offer. Summing up, primary market

is the means by which companies float shares to the general public in an Initial public

offer to raise capital.

Secondary market: secondaryrefers Market to a market where securities are traded after

being initially offered to the public in the primary market and/or listed on the stock

Exchange. Majority of the trading is done in the secondary market. Secondary market

comprises of equity markets and the debt markets. For the general investor, the secondary

market provides an efficient platform for trading of his securities .For the management of

the company. Secondary equity markets serve as a monitoring and control conduit by

facilitating value enhancing control activities, enabling implementation of incentive

based management contracts, and aggregating information (via price discovery) that

guides management decisions.

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Major Stock Exchanges in India

National Stock Exchanges (NSE)

With the liberalization of the Indian economy, it was found inevitable to lift the Indian

stock market trading system on par with the international standards. On the basis of

recommendation of high-powered committee, the national stock exchange was

incorporated in 1992by industrial development bank of India, Industrial Credit and

Investment Corporation of India, Industrial Finance Corporation of India, All Insurance

corporations, selected commercial banks and others.

Trading at NSE can be classified under two broad categories:

1 Wholesale Debt market

2 Capital Market

Wholesale debt market operations are similar to money operations institutions such as

government securities, treasury bills, and public sector unit bonds, commercial paper,

certificate of deposits.

There are two kinds of players in NSE

1 Trading Members

2 Participants

Recognised members of NSE are called trading members who trade on behalf of

themselves and their clients, participants include trading members and large players like

bank who take direct settlement responsibility.

Trading at NSE takes place through a fully automated screen-based trading mechanism,

which adopts the principal of an order-driven market. Trading members can stay at their

offices and execute the trading, since they are linked with through a commercial network.

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The prices at which the buyer and seller are willing to transect will appear on the screen.

When the price match the transaction will be completed and a confirmation slip will be

printed at the office of trading member.

NSE has several advantages over the traditional trading exchanges. They are as fallows:

1 NSE brings an integrated stock market trading network across the nation.

2 Investors can trade at the same price from anywhere in they country since

inter-market operations are settled coupled with the countrywide access to

the securities.

3 Delays in communications, late payments and the malpractices prevailing in

the traditional mechanism can be done away with greater operational

efficiency and informational transparency in the stock market operations,

with the support of total computerised network.

Bombay Stock Exchange (BSE)

Bombay Stock exchanges Limited is the oldest stock exchange in Asia with a rich

heritage popularly known as BSE, it was established as The Native Share & stock

brokers association in 1875. It is the first stock exchange in the country to obtain

permanent recognition in 1956. The exchange pivotal and pre-eminent role in the

development of the Indian capital market is widely recognised and its index, SENSEX, is

tracked worldwide. Earlier an Association of Persons (AOP), the exchange is now a

demutualised and corporate entity incorporated under the provisions of the

companies act, 1956, pursuant to the BSE scheme, 2005 notified by the Securities and

Exchange Board of India (SEBI)

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With demutualization, the trading rights and ownership rights have been de-linked

effectively addressing concerns regarding perceived and real conflicts of interest. The

exchange is professionally managed under the overall direction of the Board of Directors.

The board comprises eminent professionals, representatives of Trading Members and

Managing Director of the Exchange. The Board is inclusive and is designed from the

participation of market intermediaries.

In terms of organization structure, the Board formulates larger policy issues and

exercises overall control. The committees constituted by the Board are broad-based. The

Managing Director and a management team of professionals who manage the day-to-day

operations of the exchange.

The exchange has a nation-wide reach with a presence in 417 cities and towns of India.

The systems and processes of the Exchange are designed to safeguard market integrity

and enhance transparency in operations. During the year 2004-2005 the trading volumes

on the Exchange showed robust growth.

The Exchange provides an efficient and transparent market for trading in equity, debt

instruments and derivatives. The BSEs Online Trading System (BOLT) is a proprietary

system of the Exchange is BS 7766-2-2002 certified. The surveillance and clearing and

settlement functions of the exchange are ISO 9001:2000 certified.

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STOCK EXCHANGE stands for:

S-Security provider for investor

T-Tax benefits, planning & Exemptions

O-Optimum return on Investment

C-Cautious approach

K-Knowledge of the market

E-Eligibility for accruals

X-Exchange of security transactions

C-Cyclopedia of listed companies

H-High yield

A-Authentic information

N-New entrepreneurs encouragement

G-Guidance to Investor & companies

E-Equity cult.

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NEED OF THE STUDY

The Need for the study arises because of the amazing performance of the market

never before. This is because of the huge inflows of FIIs during last 6 years. From 2003

there has been a bull run, though there is some temporary fall down in Sensex where

there was a great loss of even 800 Sensex points in single day, which didnt stop till date.

FIIs have unique tendency i.e. they can make the markets and break the markets. They

are efficient enough to create a stable market and efficient enough to speculate the things

even in stable market and destroy its fundamental strength. FIIs have a tendency of

herding which is very dangerous they dont bother about the domestic markets they just

follow the rumours and pull off their investments.

OBJECTIVES OF STUDY

1 To know the Role of FIIs in Indian markets.

2 To study the effects of FIIs on Indian markets.

3 To study the factors determining the FIIs investment in India.

4 To know Trends of FIIs investment in India and Share of FIIs in some companies.

5 To study the Market, which changes its behaviour along with the FIIs?

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SCOPE

1 The study is focused on the role played by the FIIs Indian share market.

2 The study also covers the total FII flows into Indian markets i.e. BSE.

3 The study also covers various factors that are influencing the FIIS affect on the

Indian economy.

RESEARCH METHODOLOGY

My study is based on Secondary data and the data is collected through various,

books, magazines, news papers, Journals and different sources.

For better understanding, Tables and Graphs are used where ever necessary.

Drawing conclusions by analyzing the collected data, interpreting the results from

the tables and graphs used.

Many number of magazines like business today, business India, Foreign trade

review, Financial Express, Finance India etc,..Were also referred to collect the

data.

Different sites also searched to collect the data.

Review-1:

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Topic: - Why FIIs are investing in India?

Source: - Foreign Trade Review

Published: - Oct, 2008

Author:- S.S.S.KUMAR

Abstract:-

Indias forex reserves swelled from a meager US$ 3.96 billion in early March

1990 to more than US$ 200 billions by the end of June 2008. Substantial part of the forex

reserves are built up from the FII Inflows and not from trade surpluses. FIIS be suddenly

withdrawn. Against this backdrop in this paper we raise the following questions: Why

Foreign Institutional Investors Investing in India? Is it the diversification benefit that

the Indian market offers for an investor in the developed market thats driving these huge

inflows or is it the portfolio flows? The analysis shows that Indian stock market offers a

very attractive rate of return next only to Turkey and Mexico among the emerging

markets considered in this study.

Review-2:

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Topic: - Indian stocks are back on FII radar

Source: - THE WALL STREET JOURNAL

Published: - Mon, Jul 27 2009.

Abstract:-

Foreign investors bought stocks worth $6.42 bn in Apr-Jun, but holdings still lower than

a year ago

Ravi Krishnan and Ashwin Ramarathinam

Mumbai: Foreign institutional investors, or FIIs, the largest category of investors in the

India equity markets, are back with a bang. FIIs increased their investment in four out of

five firms among the 50 that make up the Nifty index during the quarter ended June.

Investors bought into the India growth story and expectations of economic reforms after

the Congress-led United Progressive Alliance (UPA) won a decisive mandate in the

April-May general election.

The Bombay Stock Exchanges Sensex, Indias most widely tracked equity index, gained

49.2% in the three months ended June, the best quarterly gain in 17 years. There are 30

stocks in the Sensex, and 29 of them are also listed on the Nifty.

Its a reflection of political stability and reforms moving along, said Sanjay Sachdev,

country manager and regional fund manager (South-East Asia) at Tokyo-based Shinsei

Bank Ltd. The global liquidity flow has also improved and that has a positive impact.

As liquidity returned slowly to the global financial system and risk appetite resurfaced on

hopes of an early turnaround in major economies, investors started buying.

For 15 straight weeks since 9 March, institutional investors were net buyers in emerging

markets, including India, driving the valuation up by as much as 80% in the case of the

Sensex.

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According to fund flows tracker EPFR Global, emerging market equities collectively

absorbed $26.5 billion (Rs1.28 trillion) of institutional investment in the quarter ended

June, the highest since the December quarter of 2007.

In India, foreign investors bought stocks worth $6.42 billion.

What has also probably helped bring in foreign capital is the relatively strong economic

growth in India.

The rest of the world is struggling, said Abhay Aima, head of equities, private banking

and third-party products, at HDFC Bank Ltd, the countrys second largest private bank.

In India, people are saying worst case is 6% (economic growth). That attracts capital.

Gross domestic product, or GDP, grew at 5.8% in the January-March quarter, much

lower than 8.6% in the year-ago period, but higher than market expectations of 5%. GDP

grew 6.7% in the last fiscal.

Among the 50 stocks on the Nifty, the benchmark of the National Stock Exchange, FIIs

increased their holdings in 42. Under the norms of the capital market regulator, the

Securities and Exchange Board of India (Sebi), listed firms are required to file a detailed

break-up of their shareholding pattern to stock exchanges for every quarter within three

weeks of the end of the quarter.

Review-3:

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Topic: - Inflow in stock markets cross $ 6-bn mark FII

Source: - THE FINANCIAL EXPRESS

Published: - Jul 19, 2009

Abstract:-

New Delhi: In a sign of confidence in the Indian markets, Foreign Institutional Investors

pumped in over six billion dollar, or about Rs 29,940 crore this year, with over one

billion dollar coming in July alone.

An analysis of FIIs activity shows that overseas investors are the net purchasers of Indian

stocks worth 6.18 billion dollars (Rs 29,940.30 crore) from January to July this year.

According to the data with the Securities and Exchange Board of India, FIIs were the

gross buyer of shares worth Rs 2,98,675.70 crore while they sold equities valued at Rs

2,68,735.30 crore, resulting in a net inflow of Rs 29,940.30 crore (6.18 billion dollar).

In July, FIIs made a net investment of Rs 5,637 (1.16 mn dollar) in the domestic equity

markets, showing their confidence in an emerging market like India.

Significantly, during the same period, the Bombay Stock Exchange's barometer Sensex

has lost nearly two per cent.

However, it seems that the overseas investors are still skeptic about debt market as they

have not turned into net investor in this segment this year.

Till now, FIIs are the net seller of debts worth Rs 973.60 crore (151 million dollar), evenas the overseas investors infused Rs 4,485.10 crore (932 million dollar) so far in July, the

SEBI data said.

Review-4:

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Topic: - FIIs turn off Indian stocks to havens closer home

Source: - BUSINESS LINE

Published: - SUNDAY JUNE 28 09

Abstract:-

Chennai, June 27 Foreign institutional investors (FIIs) have turned net sellers in Indian

stocks after being consistent buyers over the past couple of months. The recent selling

appears to be triggered by profit-taking by overseas investors, as they re-balance their

portfolio in favour of safer avenues back home.

Rising bond yields and expectations that interest rates will edge up again may also have

reduced the FII appetite for Indian stocks, market participants and fund managers feel.

After pumping in Rs 24,837 crore into Indian stocks between mid-April and end-May,

FIIs have been net sellers of equity worth over Rs 3,670 crore ($757 million) in the last

two weeks.

The recent FII selling in India coincides with signs of emerging markets as a class

witnessing outflows the past few days after receiving steady inflows for several weeks.

Review-5:

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Topic: - FII trends and effects on Indian markets

Source: - Economic Times (New Delhi, India)

Published: - February, 2007.

Authors: - Ajay Jindal and Noemie Bisserbe.

Abstract:-

The pharmaceutical sector has been among the worst performing sectors in the

market over the last 12 months.

However, it appears that foreign institutional investors (FIIs) have consistently

kept faith with top pharmaceutical companies. In most companies, FII stakes have

gone up, after reaching a low around a year ago.

The FIIs' attitude to the pharma sector is that they seem to prefer companies

leaning more towards discovery research. Dr Reddy's, which is the most

aggressive Indian player in the R&D field.

The pharmaceutical sector has been among the worst performing sectors in the

market over the last 12 months.

However, it appears that foreign institutional investors (FIIs) have consistently

kept faith with top pharmaceutical companies. In most companies, FII stakes have

gone up, after reaching a low around a year ago.

Review-6:

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Topic: FIIs pulling money out, but things may not be too bad.

Source: India Abroad.

Published: July-26th-2004

Authors: Suggu & Kanchana

Abstract:-

Some analysts say India must remove bureaucratic hurdles to woo foreign

investors.

The July 13 attack that killed 27 people in Jammu has dampened market

sentiment. Fears have resurfaced, pulling down the bourses.

The new terrorist strike has cast doubts over the prospects of India being a safe

and attractive investment destination, even as investors struggle to recover from

the debilitating impact of the May 14 attack in Jammu.

Foreign institutional investors pulled out about Rs.11 billion ($225.36

million) from the Indian markets between May 15 and June 30. The BSE 30-share

sensitive index - the Sensex - touched 3097 points on May 31.

Review-7:

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Topic: Foreign funds look past India's politics.

Source: Business Asia

Published: May-17th-2005

Authors: Arackaparambil, Rosemary

Abstract:-

Foreign funds have poured into India to buy selected shares despite growing

political uncertainty, fund managers and analysts claim.

Bargains began to emerge last month as investors bailed out of the market,

unnerved by the collapse of the ruling coalition and failed attempts by opposition

parties to cobble together an alternative government.

The inability of opposition figure Ms Sonia Gandhi to form a viable government

has temporarily condemned India to rudderless leadership.

Political confusion has not deterred foreign investors, who appear willing to brave

the political risk in order to pick up good stocks on the cheap.

Review-8:

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Topic: Number of FIIs in India crosses 1000

Source:

Published: December 29, 2006

Authors: Deepak Korgaonkar.

Abstract:-

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

Exchange Board of India (Sebi) crossed the 1,000 mark.

The total number of FIIs having their offices in India has now increased to 1,030. In the

beginning of calendar year 2006, the figure was 813.

As many as 37 foreign entities registered with the market regulator till December 28,

highest ever single month registrations by the FIIs since their entry into Indian market in

1993.

In 1993, Pictet Umbrella Trust Emerging Markets Fund, an institutional investor from

Switzerland, was the only FII to enter the Indian market.

While in 1994, no new registrations were reported, between 1995 and 2003, an average

of 51 new FIIs opened their shops in the country each year. The number of new

registrations with the Sebi increased to 144 in 2004 and 209 in 2005.

Out of 1,030 FIIs from 42 different countries, as many as 388 FIIs are from the US, 167

from the Great Britain, 73 from Luxembourg, 51 from Singapore, 35 each from Australia

and Hong Kong, 32 from Canada, 29 from Ireland, 27 from Netherlands, 25 from

Mauritius, 22 from Switzerland and 20 from France.

COMPANY PROFILE

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Interconnected Stock Exchange of India Limited (ISE) is a national-level stock

exchange providing trading, clearing, settlement, risk management and

surveillance support to its Trading Members. It has 841 Trading Members,

who are located in 131 cities spread across 25 states. These intermediaries are

administratively supported through the regional offices at Delhi, Kolkata,

Patna, Coimbatore and Nagpur, besides Mumbai. Inter-connected stock

exchange of India limited [ISE] has been promoted by 14 Regional stock

exchanges to provide cost-effective trading linkage/connectivity to all the

members of the participating Exchanges, with the objective of widening the

market for the securities listed on these Exchanges. ISE aims to address the

needs of small companies and retail investors with the guiding principle of

optimizing the existing infrastructure and harnessing the potential of regional

markets, so as to transform these into a liquid and vibrant market through the

use of state-of-the-art technology and networking.

The participating Exchanges of ISE in all about 4500 stock brokers, out of

which more than 200 have been currently registered as traders on ISE. In order to

leverage its infrastructure and to expand its nationwide reach, ISE has also

appointed around 450 Dealers across 70 cities other than the participation

Exchange centers. These dealers are administratively supported through the

regional offices of ISE at Delhi [north], Kolkata [east], Coimbatore, Hyderabad

[south] and Nagpur[central], besides Mumbai.

ISE aims to address the needs of small companies and retail investors by

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harnessing the potential of regional markets, so as to transform them into a liquid

and vibrant market using state-of-the art technology and networking.

ISE has also floated a wholly-owned subsidiary, ISE securities and services

limited [ISS], which has taken up corporate membership of the National Stock

Exchange of India Ltd. [NSE] in both the Capital Market and Futures and Options

segments and the Stock Exchange, Mumbai In the Equities segment, so that the

trader and their local market. ISE thus provides the investors in smaller cities a

one-stop solution for the cost-effective and efficient trading and settlement in

securities.

It also aims to make and build the professional careers of MBAs, post

graduates and graduates, with a view to enabling them to work effectively in

securities trading, risk management, financial management, corporate finance

disciplines or functions as intermediaries (viz.stock brokers, sub-brokers,

merchant brokers, clearing bankers, etc. )

With the objectives of broad basing the range of its services, ISE has started

offering the full suite of DP facilities to its Traders, Dealers and their clients.

MISSION

ISE shall endeavor to provide flexible and cost-effective access to multiple

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markets to its intermediaries across the country using the latest technology.

OBJECTIVES

1. Create a single integrated national level solution with access to multiple

markets for providing high cost-effective service to millions of investors

across the country.

2. Create a liquid and vibrant national level market for all listed companies in

general and small capital companies in particular.

3. Optimally utilize the existing infrastructure and other resources of

participating Stock Exchanges, which are under-utilized now.

4. Reduce transaction cost.

5. Provide clearing and settlement facilities to the Traders and Dealers across

the Country at their doorstep in a decentralized mode.

6. Spread demat trading across the country.

SAILENT FEATURES

Network of intermediaries:

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and services offered by it. The aim is to penetrate the retail market and strengthen the

position, so that a wide variety of products and services having appeal for the retail

market can be offered using a common distribution channel. The aggressive pricing

policy also ensures that the intermediaries have sufficient financial incentives for offering

these products and services to the end-clients.

Trading, Risk Management and Settlement Software Systems:

The ORBIT (Online Regional Bourses Inter-connected Trading) and AXIS (Automated

Exchange Integrated Settlement) software developed on the Microsoft NT platform, with

consultancy assistance from Microsoft, is the most contemporary of the trading and

settlement softwares introduced in the country. The applications have been built on a

technology platform, which offers low cost of ownership, facilitates simple maintenance

and supports easy up gradation and enhancement. The softwares are so designed that the

transaction processing capacity depends on the hardware used; capacity can be added by

just adding inexpensive hardware, without any additional software work.

Vibrant Subsidiary Operations:

ISS, the wholly owned subsidiary of ISE, is one of the biggest Exchange subsidiaries in

the country. On any given day, more than 250 registered intermediaries of ISS traded

from 46 cities across the length and breadth of the country.

MILESTONES

July 6, 1996 A report on Inter-connected Market System (ICMS) submitted

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to the Federation of Indian Stock Exchange (FISE).

October 26, 1996 Steering Committee was constituted by FISE at Hyderabad.

January 4, 1997 Price water House Coopers, the management consultancy firm,

January submitted a feasibility report and recommended the

establishment of ICMS.

Jan 22, 1998 ISE incorporated as a company limited by guarantee.

November 18, 1998 SEBI grants recognition to ISE.

February 26, 1999 Commencement of trading on ISE.

December 31, 1999 Induction of 450 Dealers commences.

January 18, 2000 Incorporation of ISS as a company limited by share capital.

February 24, 2000 SEBI registers ISS for the Capital Market segment of NSE.

May 3, 2000 Commencement of trading by ISS in the Capital Market

segment of NSE.

January 10, 2001 Turnover in the Capital Market segment of NSE crosses Rs.

1000 million per day.

February 28, 2001 Turnover of Rs. 1508.80 million recorded by ISS in the Capital

Market segment of NSE.

May 4, 2001 Internet trading for clients started by ISS for the NSE segment

through DotEx plaza.

May 19, 2001 ISEs website, www.iseindia.com launched.

February 13,2002 SEBJ registers ISS for the Futures & Options segment of NSE.

May 6, 2002 ISS commences trading in the Futures & Options segment of

NSE.

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March 12, 2003 ISE admitted as a member of the Equities segment of BSE.

April 1,2003 DP services through CDSL launched by ISE.

June 21,2003 First Investor Education Program under the Securities Market

Awareness Campaign conducted at Vashi.

January 9, 2004 Peak turnover of Rs.3034.90 million recorded by ISS in the

Capital Market segment of NS.

May 17, 2004 first DP branch office opened at Coimbatore by ISE.

July 17, 2004 First Investor Point opened at the Vashi Railway Station

Complex by ISE.

July 24, 2004 Second DP branch opened New Delhi by ISE.

September 3, 2004 Third DP branch opened at Kolkata by ISE.

December 27, 2004 Trading in the BSE equities segment started by ISS.

September 15, 2005 Approval of ISEs Corporatization and Demutualisation Scheme

by SEBI.

October 20, 2005 Switchover to Direct Client Dealing commences in ISS.

November 24, 2005 ISE re-registered as a for profit company, limited by shares.

November 24, 2005 Board of ISE reconstituted in tune with the Corporatisation and

Demutualisation provision.

BOARD OF DIRECTORS

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Shri K.Rajendra Nair - Chairmen, Public Interest Director

Shri P.J.Mathew - Managing Director

Shri S.Ravi - Public Interest Director

Shri K.V.Thomas - Shareholder Director

Shri K.D.Gupta - Shareholder Director

Shri Maninder Singh Grewal - Shareholder Director

Shri Sanjeev puri - Shareholder Director

Shri T.N.T.Nayar - Shareholder Director

Shri P.Siva Kumar - Shareholder Director

Shri Surendra Holani - Trading Member Director

Shri Rajiv Vohra - Trading Member Director

PROMOTING STOCK EXCHANGES

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Bangalore Stock Exchange

Limited

51, Stock Exchange Towers1st Cross, J. C. RoadBangalore - 560 027

Magadh Stock Exchange Association Limited

9th floor, Ashiana PlazaBudh MargPatna - 800 001

Cochin Stock ExchangeLimited

MES Dr. P. K. Abdul GafoorMemorialCultural Complex 36/1565, 4thfloorJudges Avenue, KaloorCochin - 682 017

Saurashtra Kutch Stock Exchange LimitedPopatbhai Sorathia BhavanSadar BazarRajkot - 360 001

Coimbatore Stock Exchange

Limited

Stock Exchange BuildingCSX Towers683-686, Trichy Road,SinganallurCoimbatore - 641 005

The Uttar Pradesh Stock Exchange Assn. Limited

Padam Towers

14/113, Civil LinesKanpur - 280 001

Jaipur Stock Exchange

Limited

Stock Exchange BuildingJ.L.N. Marg, Malviya NagarJaipur - 302 017

Bhubaneswar Stock Exchange Limited

Stock Exchange Bhavan, P-2, Jayadev ViharP.O. Chandrasekharpur Bhubaneswar-751023

Mangalore Stock Exchange

4th floor, Ram Bhavan ComplexKodialbailMangalore - 575 003

Madhya Pradesh Stock Exchange Limited

Palika Plaza, Phase II201 M. T. H. CompoundIndore 451001

Gauhati Stock Exchange

Limited

Saraf Building AnnexeA. T. RoadGuwahati - 781 001

Madras Stock Exchange Ltd

30 (old no. 11), Second Line BeachChennai 600 001

FII ACTIVITY IN THE MONTH OF APRIL 2009

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DAY ENDED

GROSS PURCHASES GROSS SALES NET INV.

(Rs m) (Rs m) (Rs m)

1-Apr-09 16,952 14,604 2,348

2-Apr-09 27,615 20,653 6,962

6-Apr-09 26,198 24,475 1,723

8-Apr-09 37,969 33,128 4,841

9-Apr-09 21,018 20,112 906

13-Apr-09 20,583 14,164 6,419

15-Apr-09 40,626 32,904 7,722

16-Apr-09 30,193 26,234 3,959

17-Apr-09 25,476 17,586 7,890

20-Apr-09 18,682 15,356 3,326

21-Apr-09 14,963 15,590 -627

22-Apr-09 14,245 14,228 17

23-Apr-09 14,061 10,944 3,117

24-Apr-09 19,484 14,349 5,135

27-Apr-09 36,618 18,221 18,397

28-Apr-09 15,441 17,180 -1,739

29-Apr-09 28,693 25,247 3,446

TOTAL 408,817 334,975 73,842

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FII ACTIVITY IN THE MONTH OF MAY 2009

DAY ENDED

GROSSPURCHASES

GROSS SALES NET INV.


04-may. 38528 23616 14912

05-may. 29691 22741 6950

06-may. 28572 21689 6883

07-may. 18988 15036 3952

08-may. 31646 19240 12406

11-may. 16844 15019 1825

12-may. 25425 20487 4938

13-may. 60331 19479 40852

14-may. 15234 18691 -3457

15-may. 26730 16728 10002

18-may. 581 47 534

19-may. 125789 75341 50448

20-may. 63995 66337 -2342

21-may. 38964 37495 1469

22-may. 24120 31067 -6947

25-may. 50926 20465 30461

26-may. 23231 24050 -819

27-may. 40767 36398 4369

28-may. 58709 37418 21291

29-may. 59793 51451 8342

TOTAL 778,864 572,795 206,069

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FII ACTIVITY IN THE MONTH OF JUNE 2009

DAY ENDED

GROSSPURCHASES



1-Jun-09 37985 31806 6179

2-Jun-09 40676 38583 2093

3-Jun-09 34238 37400 -3162

4-Jun-09 36261 29555 6706

5-Jun-09 45506 31332 14174

8-Jun-09 26941 23992 2949

9-Jun-09 38153 28246 9907

10-Jun-09 38515 31338 7177

11-Jun-09 35818 25887 9931

12-Jun-09 29319 24132 5187

15-Jun-09 25786 27919 -2133

16-Jun-09 18623 25742 -7119

17-Jun-09 21683 23948 -2265

18-Jun-09 21384 26543 -5159

19-Jun-09 18944 19205 -261

22-Jun-09 16172 18142 -1970

23-Jun-09 20473 27055 -6582

24-Jun-09 16029 22041 -6012

25-Jun-09 41115 51496 -10381

26-Jun-09 25477 18748 6729

29-Jun-09 23881 19909 3972

30-Jun-09 29521 27232 2289

TOTAL 642,500 610,251 32,249

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FII ACTIVITY IN THE MONTH OF JULY 2009

DAY ENDEDGROSS PURCHASES GROSS SALES NET INV.


1-Jul-09 14486 12849 1637

2-Jul-09 23027 19008 4019

3-Jul-09 21496 15813 5683

6-Jul-09 31895 35408 -3513

7-Jul-09 59567 31581 27986

8-Jul-09 34510 26755 7755

9-Jul-0923453 26369 -2916

10-Jul-09 18978 25209 -6231

13-Jul-09 20715 18811 1904

14-Jul-09 21069 16540 4529

15-Jul-09 28875 18565 10310

16-Jul-09 26185 23267 2918

17-Jul-09 28466 25866 2600

20-Jul-09 25789 18729 706021-Jul-09 25474 24973 501

22-Jul-09 29364 27909 1455

23-Jul-09 53070 45971 7099

24-Jul-09 32639 22132 10507

27-Jul-09 30323 25861 4462

28-Jul-09 43156 35775 7381

29-Jul-09 28517 27126 1391

30-Jul-09 50712 38872 11840

31-Jul-09 30798 22922 7876

TOTAL 702,564 586,311 116,253

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FII ACTIVITY IN THE MONTH OF AUGUST 2009

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DAY ENDED

GROSSPURCHASES



3-Aug-09 18265 13505 4760

4-Aug-09 27814 25737 2077

5-Aug-09 19489 24294 -4805

6-Aug-09 25809 28274 -2465

7-Aug-09 21418 29879 -8461

10-Aug-09 29728 32000 -2272

11-Aug-09 28941 21900 7041

12-Aug-09 25950 27055 -1105

13-Aug-09 29548 20176 9372

14-Aug-09 26399 16092 10307

17-Aug-09 17664 27402 -9738

18-Aug-09 16443 16398 45

19-Aug-09 22887 31608 -8721

20-Aug-09 17776 20790 -3014

21-Aug-09 24132 18670 5462

24-Aug-09 25439 16952 8487

25-Aug-09 20393 20929 -536

26-Aug-09 28126 17767 10359

27-Aug-09 41096 27668 13428

28-Aug-09 25743 14815 10928

31-Aug-09 26739 27601 -862

TOTAL 519,799 479,512 40,287

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FII ACTIVITY IN THE MONTH OF SEPTEMBER 2009

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DAY ENDED

GROSSPURCHASES



1-Sep-09 25968 28993 -3025

2-Sep-09 15003 20745 -5742

3-Sep-09 19122 18533 589

4-Sep-09 22083 22651 -568

7-Sep-09 29528 19028 10500

8-Sep-09 39293 27548 11745

9-Sep-09 31014 28540 2474

10-Sep-09 29985 24236 5749

11-Sep-09 26608 23302 3306

14-Sep-09 18631 16010 2621

15-Sep-09 29112 20251 8861

16-Sep-09 36089 24350 11739

17-Sep-09 60749 34117 26632

18-Sep-09 45045 26347 18698

22-Sep-09 32084 17049 15035

23-Sep-09 43112 24785 18327

24-Sep-09 57112 43891 13221

25-Sep-09 54403 21284 33119

29-Sep-09 37029 26004 11025

30-Sep-09 46879 31790 15089

TOTAL 698,849 499,454 199,395

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FII ACTIVITY IN THE MONTH OF OCTOBER 2009

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DAY ENDED

GROSSPURCHASES



1-Oct-09 46325 32604 13721

5-Oct-09 37096 39471 -2375

6-Oct-09 41783 41469 314

7-Oct-09 40717 32985 7732

8-Oct-09 40006 43625 -3619

9-Oct-09 32825 30318 2507

12-Oct-09 30589 20599 9990

14-Oct-09 42684 26859 15825

15-Oct-09 39242 29611 9631

16-Oct-09 38616 26649 11967

20-Oct-09 44783 27083 17700

21-Oct-09 27583 31499 -3916

22-Oct-09 26825 29783 -2958

23-Oct-09 29424 29910 -486

26-Oct-09 21479 19569 1910

27-Oct-09 49898 36488 13410

28-Oct-09 30359 30081 278

29-Oct-09 34189 50135 -15946

30-Oct-09 40725 33368 7357

TOTAL 695,148 612,106 83,042

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FII ACTIVITY IN THE MONTH OF NOVEMBER 2009

DAY ENDED

GROSSPURCHASES



3-Nov-09 21881 24889 -3008

4-Nov-09 33952 33814 138

5-Nov-09 20355 17679 2676

6-Nov-09 34280 27320 6960

9-Nov-09 22802 16310 6492

10-Nov-09 30354 26069 4285

11-Nov-09 30871 21143 9728

12-Nov-09 25174 23660 1514

13-Nov-09 22719 16001 6718

16-Nov-09 25059 18266 6793

17-Nov-09 23794 17856 5938

18-Nov-09 25860 20637 5223

19-Nov-09 20835 24178 -3343

20-Nov-09 22917 24173 -1256

23-Nov-09 19513 20193 -680

24-Nov-09 23427 20400 3027

25-Nov-09 22553 21901 652

26-Nov-09 29352 26291 3061

27-Nov-09 14208 21511 -7303

30-Nov-09 29839 22762 7077

TOTAL 499,745 445,053 54,692

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FII ACTIVITY IN THE MONTH OF DECEMBER 2009

DAY ENDED

GROSSPURCHASES



1-Dec-09 45330 22389 22941

2-Dec-09 39149 24028 15121

3-Dec-09 23652 19365 4287

4-Dec-09 23038 18589 4449

7-Dec-09 19370 19399 -29

8-Dec-09 28737 18796 9941

9-Dec-09 21058 24027 -2969

10-Dec-09 25548 21782 3766

11-Dec-09 21678 18257 3421

14-Dec-09 18301 16556 1745

15-Dec-09 22954 21814 1140

16-Dec-0922151 23544 -1393

17-Dec-09 25346 20455 4891

18-Dec-09 22348 23182 -834

21-Dec-09 18374 20957 -2583

22-Dec-09 14108 11858 2250

23-Dec-09 24675 11140 13535

24-Dec-09 15947 7834 8113

29-Dec-09 17761 13917 3844

30-Dec-09 14172 10634 3538

31-Dec-09 27025 18685 8340

TOTAL 490,722 387,208 103,514

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FII ACTIVITY IN THE MONTH OF JAN 2010

DAY ENDED

GROSSPURCHASES



1-Jan-10 58816 43974 14842

4-Jan-10 16216 9200 7016

5-Jan-10 33383 22763 10620

6-Jan-10 34316 25925 8391

7-Jan-10 34273 30096 4177

8-Jan-10 32683 31176 1507

11-Jan-10 75386 27946 47440

12-Jan-10 28936 31556 -2620

13-Jan-10 36220 36655 -435

14-Jan-10 36024 37388 -1364

15-Jan-10 19836 28734 -8898

18-Jan-10 26199 23252 2947

19-Jan-10 21237 25752 -4515

20-Jan-10 27117 27440 -323

21-Jan-10 26986 32681 -5695

22-Jan-10 32472 53067 -20595

25-Jan-10 16287 25291 -9004

27-Jan-1029571 48769 -19198

28-Jan-10 34961 56599 -21638

29-Jan-10 39400 37426 1974

TOTAL 660,319 655,690 4,629

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FII ACTIVITY IN THE MONTH OF FEB 2010

DAY ENDED

GROSS PURCHASES GROSS SALES NET INV.


1-Feb-10 23455 23943 -488

2-Feb-10 28101 27992 109

3-Feb-10 23744 18888 4856

4-Feb-10 17416 17841 -425

5-Feb-10 15178 31475 -16297

8-Feb-10 17418 25483 -8065

9-Feb-10 19788 23744 -3956

10-Feb-10 23768 24004 -236

11-Feb-10 18089 14580 3509

15-Feb-10 16286 14111 2175

16-Feb-10 11813 9243 2570

17-Feb-10 29770 17531 12239

18-Feb-10 20483 20772 -289

19-Feb-10 21358 18424 2934

22-Feb-10 15382 14986 396

23-Feb-10 21079 13641 7438

24-Feb-10 24027 17869 6158

25-Feb-10 24021 26458 -2437

26-Feb-10 36781 25837 10944

TOTAL 407,957 386,822 21,135

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FII ACTIVITY IN THE MONTH OF MARCH 2010

DAY ENDED

GROSSPURCHASES



2-Mar-10 38127 22780 15347

3-Mar-10 29409 19276 10133

4-Mar-10 25851 18929 6922

5-Mar-10 34625 15834 18791

8-Mar-10 44613 22018 22595

9-Mar-10 37301 19599 17702

10-Mar-10 27167 22985 4182

11-Mar-10 23029 18559 4470

12-Mar-10 25509 21620 3889

15-Mar-10 44016 30489 13527

17-Mar-10 28192 16478 11714

18-Mar-10 26335 19227 7108

19-Mar-10 26717 22782 3935

22-Mar-10 19929 17224 2705

23-Mar-10 24675 19820 4855

25-Mar-10 53251 42311 10940

26-Mar-10 34698 23906 10792

29-Mar-10 29462 19138 10324

30-Mar-10 27190 18785 8405

TOTAL 600,096 411,760 188,336

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FII Investments over Last Year

MONTH ENDED NET INV.

MONTHEND

Rs / US$MONTH END

INDEXCUMM.

INV. % GAIN % GAIN(Rs m) (Rs m) (Rs m) (US$ m)

Jan - 2009 -42502 48.88 9424 -42502 88 107Feb - 2009 -26905 51.16 8892 -69407 92.3 133.4

Mar - 2009 2690 50.73 9709 -66717 92.7 136.1

Apr - 2009 73842 50.09 11403 7125 -294.7 -224.7May - 2009 206069 47.09 14625 213194 10.6 17.8

Jun - 2009 32249 47.91 14494 245443 12.1 19.1

Jul - 2009 116253 47.94 15670 361696 12.4 20.3Aug - 2009 40287 48.83 15667 401983 12.5 20.6

Sep - 2009 199395 48.11 17127 601378 9.5 17.8

Oct - 2009 83042 46.98 15896 684420 9.7 17.6Nov - 2009 54692 46.51 16926 739112 9.3 16.9Dec - 2009 103514 46.62 17465 842626 8.4 15.6

Jan-2010 58130.3 46.19 16357 900756.3 8.3 15.2

Feb-2010 38655.5 45.84 15651 939411.8 8.25 14.9

Mar -2010 188,336 45.08 17,590 214,100 (0.3) 1.2

73
http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=1&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=2&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=3&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=4&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=5&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=5&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=6&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=7&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=7&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=8&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=8&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=9&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=10&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=11&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=11&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=12&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=12&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=2&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=3&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=4&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=5&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=5&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=6&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=7&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=8&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=8&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=9&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=10&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=11&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=11&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=12&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=12&Year=2009http://www.equitymaster.com/india-markets/fiis/DisplayDailyFII.asp?Month=1&Year=2009


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Showing FIIs % of Investment in different sectors of the Economy

Sector FII % of Investment

IT and Enabled services 28

Pharma 09

Aviation 06

Banking Industry 21

Real Estate

11

Others

25

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FIIS % OF INVESTMENT

IT and Enabled Services

Pharma

Aviation

Banking Industry

Real Estate

Others

Interpretation

1 From the above table and Pie Chart it is clear that FIIs are majorly investing in IT

and its enabled services, which is around 28%.

2 They are also keen in investing in Banking, Real estate, and Pharmacy and

Aviation sectors also.

3 It also shows FIIs interest in various sectors, and they majorly invest in the

booming sectors.

Showing the increase in Number of FIIs over the years.

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Year Number of FIIs

2010 1845

2009 1706

2008 1100

2007 1059

2006 832

2005 637

2004 540

2003 426

2002 398

2001 354

2000 315

Bar chart showing the number of FIIs from 2000 to 2010:

Interpretation

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1 From the above Bar graph it is very much clear that there has been an increase in the

number of FIIs coming to India.

2 From 315 in 2000, the FIIs has grown to over 1845 as on mar 2010.

3 After 2003 the number of FIIs registering with SEBI has seen a high growth.

Table 7: Showing % of FII Holding in Sensex companies.

Year FII %

December 2005 19.02

March 2006 23.32

December 2006 24.65

March 2007 25.40

December 2007 27.40

March 2008 29.55

December 2008 31.8

March 2009 32.8

December 2009 32.7

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March 2010 33.1

Interpretation:-

There is a consistence growth in FIIs holding in Sensex companies. In December 2005

they have a stake of 19%. It is 34.1% in the march, 2010. There has been an increase in

the FII holding in sensex companies since 2005.

Table 8: Showing FII % of share holding to overall Market

Capitalization.

Year % of FII

2005-06 4.9

2006-07 4.0

2007-08 2.09

2008-09 1.89

Interpretation

1. From the above tables it can be obsereved that FIIs % of holdings in sensex

companies has risen over the years, but their % against the overall market

capitalization has witnessed a downfall.

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2. From the second table we can say that FIIs role in determining the direction of the

secondary market may be on the decline stage.

3. Though FII inflow into Sensex companies have risen, it has not kept pace with

growth in the market capitalization of these companies.

4. Decrease in the FIIs % holding to overall market capitalization is a good sign for

the Indian share market.

Table 9: Showing FII % of holding in some major Sensex Companies:

Company 2009(%) 2008(%) 2007(%)

Infosys Technologies 42.02 39.30 40.57

Satyam computer services 60.04 52.55 54.04

Ranbaxy Laboratories 19.45 19.39 22.24

Cipla 16.59 18.78 17.57

HDFC Bank 40.49 32.49 26.69

ICICI Bank 60.95 42.87 48.85

SBI 11.90 11.90 11.46

Jet Airways 8.58 13.78 12.97

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Interpretation

1 From the above table it is clear that FIIs take a good amount of share in Sensex

companies.

2 In most of their share has shown an increasing trend.

3 Especially in IT and Banking companies they are keen in increasing their share.

4 Their investment is spread across all the major sectors of the economy.

Table 10: Showing SENSEX Movements as against FIIs Trading

Activity from April 01, 2007-March 31,2010.

MonthOpening

PriceClosing price

Increase/Decrease in Stock

Price

FII Netinvestment(purchase-

sales)

Apr-07 12,811.93 13,872.37 1,060.44 59987

May-07 13,987.77 14,544.46 556.69 40968

Jun-07 14,610.28 14,650.51 40.23 71694

Jul-07 14,685.16 15,550.99 865.83 189953Aug-07 15,344.02 15,318.60 -25.42 -41913

Sep-07 15,401.99 17,291.10 1,889.11 189485

Oct-07 17,356.99 19,837.99 2,481.00 173631

Nov-07 20,130.23 19,363.19 -767.04 -45974

Dec-07 19,547.09 20,286.99 739.90 37558

Jan-08 20,325.27 17,648.71 -2,676.56 -42,502.00

Feb-08 17,820.67 17,578.72 -241.95 -26,905.00

Mar-08 17,227.56 15,644.44 -1,583.12 2,690.00

Apr-08 15,771.72 17,287.31 1,515.59 73,842.00

May-08 17,560.15 16,415.57 -1,144.58 206,069.00

Jun-08 16,591.46 13,461.60 -3,129.86 32,249.00

Jul-08 13,480.02 14,355.75 875.73 116,253.00

Aug-08 14,064.26 14,564.53 500.27 40,287.00

Sep-08 14,412.99 12,860.43 -1,552.56 199,395.00

Oct-08 13,006.72 9,788.06 -3,218.66 79,477.00

Nov-08 10,209.37 9,092.72 -1,116.65 -172,269.00

Dec-08 9,162.94 9,647.31 484.37 48,827.00

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Jan-09 9,720.55 9,647.31 -73.24 1,244.00

Feb-09 9,720.55 9,424.24 -296.31 5,080.00

Mar-09 9,363.58 8,891.61 -471.97 -46,722.00

Apr-09 8,762.88 9,708.50 945.62 -105,777.00

May-09 9,745.77 11,403.25 1,657.48 1,758.00

Jun-09 11,403.25 14,625.25 3,222.00 -35,979.00 Jul-09 14,746.51 14,493.84 -252.67 -65,996.00

Aug-09 14,506.43 15,666.64 1,160.21 -142,486.00

Sep-09 15,691.27 17,126.84 1,435.57 -35,037.00

Oct-09 17,186.20 17,009.17 -177.03 14,260.00

Nov-09 15,828.63 16,926.22 1,097.59 5,469.00

Dec-09 16,947.46 17,464.81 517.35 8,070.20

Jan-10 17,473.45 16,339.32 -1,134.13 19,939.40

Feb-10 16,339.32 16,254.20 -103.76 4,564.20

Mar-10 16,429.55 17,527.77 1,098.22 188,336

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