International Research Journal of Commerce , Arts and Science

 ( Online- ISSN 2319 - 9202 )     New DOI : 10.32804/CASIRJ

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IMPACT OF MACRO ECONOMIC VARIABLES ON FOREIGN INSTITUTIONAL INVESTORS IN INDIA

    1 Author(s):  DR.RAJNI

Vol -  3, Issue- 3 ,         Page(s) : 210 - 225  (2012 ) DOI : https://doi.org/10.32804/CASIRJ

Abstract

In this paper we analyze these flows and try to show the impact of stock market return, exchange rate and growth of Indian economy on FII on the basis of monthly data for the period January 1994 to September 2011. We found that there is a significant impact of the return on stock market, exchange rate and index of industrial production on FII. The two way inter-relationship between FII and return of stock market open things up for wider economic analysis. The long run and short run relationship have been deciphered by using the ECM methodology by taking into account the macroeconomic variables and FII into account. We find short run and long run impact of exchange rate on FII but only short run in the reverse direction. FII has short run impact on growth of Indian economy but no impact is found in long run.

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