I have been analyzing the effect of foreign institutional investment on the Indian Stock Market. I will analyses historic price movement in the Indian Stock Market and match these movements with the inflow of investment by foreign institutional thereby providing the effect on the Indian Stock Market. The total assets under their management amounts to almost 18% of the entire market capitalization. The dissertation paper will examine the role of these investors in Indian stock markets and analyses the market movement using the direction of the funds flow from these investors.

This research is basically based on with the help of both primary and secondary data.

Literature review: Gay and Robert (2008) investigated the impact of macroeconomic factors on the returns of four emerging markets. The emerging stock markets included were India, Brazil, China and Russia. Their multifactor model comprised of exchange rate and oil prices. By employing ARIMA model on monthly data of March 1999 to July 2006, they concluded that these two macroeconomic variables had no significant relationship with the returns of emerging markets.

Hassan and Nasir (2008) also investigated the relationship between equity prices and macroeconomic forces in long run by using monthly data of June 1998 to June 2008.To analyze the causal relationship among macroeconomic forces and stock prices ARDL approach had been used. Results of ARDL concluded the macroeconomic factors that had the main contribution in determining the equity prices in the long run were interest rates, exchange rates and money supply whereas Industrial production, oil prices and inflation had been no significant relationship in the determination of prices of