...investigate if more shares that foreign institutional investors have over major shareholders and the more shares that foreign institutional investors have over the previous year, the stronger the impact of foreign institutional investors have on corporate dividend policy. This study empirically shows the impact of foreign institutional investors from the viewpoint of corporate governance in India, where local institutional investors play inadequate roles as Stakeholders. FII STRONGHOLD A look at the BSE-500 ownership pattern suggests that FIIs held as much as 15 per cent of the full-market capitalisation of the BSE-500 and a whopping 35 per cent of the freefloat market cap as of March 2011, thus providing them considerable influence over stock markets. Domestic institutions (mutual funds and insurance companies), on the other hand, held a more modest 21 per cent of the free-float market cap. It is for this reason that FII trends cannot be ignored in the Indian context. SECTOR TRENDS Let’s first look at the long-term FII trends (in sectors within the BSE-500) to know sectors that have moved off the FII radar and those that are gaining ground. If we were to take...
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...resulting in fierce competition and accelerated pace of innovation. As a result inflow of Foreign Direct investments has become a striking measure of economic development in both developed and developing countries. FDI and FII thus have become instruments of international economic integration and stimulation. Fast growing economies like Singapore, China, Korea etc have registered incredible growth at onset of FDI. Though US captures most of the FDI inflows, developing countries still account for significant growth of FDI and rise in FII. FDI not only gives access to foreign capital but also provides domestic counties with cutting edge technology, desired skill sets, tools of innovation and other complementary skills. Apart from helping in creating additional economic activity and generating employment, foreign investment also facilitates flow of sophisticated technology into the country and helps the industry to march into advanced technology. A favorable business environment fostered Indian economy after 1991, when the government of India opened the door for foreign capital in the way of direct investment and through foreign institutional investors. The policies drafted to stimulate the flow of foreign capital in to India provided much needed impetus for India to emerge as an attractive destination for foreign investors. Consequently, the international capital inflows have been increased tremendously during last two decades. What is Foreign Direct Investment? Any...
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...2 (February 2012) ISSN: 2231 -5985 FIIS: FUEL OF INDIA’S GROWTH ENGINE Dr. Ankeshwar Prakash * Dr. Dharamveer ** ABSTRACT A f avorable business environment fostered Indian economy after 1991 -92, when t he government of India opened the door for foreign capital in the way of direct investm ent and t hrough foreign institutional investors. Consequently, the international capital inflows have been increased tremendously during last two decades. The capital is being invested by f oreign investor through mutual funs, investment trusts, banks, port folio mangers, charitable t rusts etc. and it has been boosting the growth of Indian economy since then. Moreover, t he growth rates in GDP i.e. around 7 to 8 percent per year as compared to 2 to 4 percent in most of the developed economies and higher interest rate attracted the foreign capital the most. This paper is an attempt to analyze t he relationship of FII investment with economic growth of India, in addition to comparative analysis of preferred investment stock of FII. * Assistant professor, Department of Commerce, D.A.V. College, Sadhoura , YNR, Haryana. **Assistant professor, Department of Management, Haryana Engineering College, Jagadhri, Haryana. International Journal of Research in F inance & Marketing http://www.mairec.org 611 IJRFM Volume 2, Issue 2 (February 2012) ISSN: 2231 -5985 FII is defined as an institution organized outside India for the purpose of making inve stments into...
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...STOCK MARKET K.S. Chalapati Rao, K.V.K. Ranganathan and M.R. Murthy* To facilitate foreign private capital flows in the form of portfolio investments, developing countries have been advised to develop their stock markets. It was suggested that these investments would help the stock markets directly through widening investor base and indirectly by compelling local authorities to improve the trading systems. While the volatility associated with portfolio capital flows is well known, there is also a concern that foreign institutional investors might introduce distortions in the host country markets due to the pressure on them to secure capital gains. In this context, this paper seeks to assess the importance of foreign portfolio investments in India relative to other major forms and to study the relationship between foreign portfolio investments and trends in the Indian stock market during the past four years. Introduction The character of global capital flows to developing countries underwent significant changes on many counts during the 'nineties. By the time the East Asian financial crisis surfaced, the overall size of the flows more than tripled. It stood at US$ 100.8 bn. in 1990 and rose to US$ 308.1 bn. by 1996. The increase was entirely due to the sharp rise in the flows under private account that rose from US$ 43.9 bn. to 275.9 billion during the same period. In relative terms the percentage of private account capital flows increased from 43.55 to 89.55 per cent (Table 1). Simultaneously...
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...instrument. But the analysts associated with stock markets are not much concerned or bothered about this instrument. As some of them, don’t have any relationship with this instrument. Indeed, this instrument is much talked about when we name or see the Foreign Institutional Investors (FIIs). Although FIIs have contributed to the Indian economy, in more ways than one, but still they have not been able to earn the respect for themselves as they should be. RBI and SEBI, every now and then, are bothered about their activities and moves that might affect the economy and the markets adversely. The recently out, Lahiri Committee Report, also lays emphasis on participatory notes, its role and functioning. The question that arises in a person’s mind is that what is a participatory note, how it functions, and why is it famous for its notoriety, etc. We will try to seek the answers of the above said questions and various other aspects of participatory notes in the following discussion. What are participatory notes? In the magazine, Business World, dated December 15th, 2003, the feature on participatory note stated that, “The past month has seen our stock market regulator, the Securities and Exchange Board of India (SEBI), nervously rattling its...
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...FDI vs FII Both FDI and FII are related to investment in a foreign country. FDI or Foreign Direct Investment is an investment that a parent company makes in a foreign country. On the contrary, FII or Foreign Institutional Investor is an investment made by an investor in the markets of a foreign nation. In FII, the companies only need to get registered in the stock exchange to make investments. But FDI is quite different from it as they invest in a foreign nation. The Foreign Institutional Investor is also known as hot money as the investors have the liberty to sell it and take it back. But in Foreign Direct Investment, this is not possible. In simple words, FII can enter the stock market easily and also withdraw from it easily. But FDI cannot enter and exit that easily. This difference is what makes nations to choose FDI’s more than then FIIs. FDI is more preferred to the FII as they are considered to be the most beneficial kind of foreign investment for the whole economy. Foreign Direct Investment only targets a specific enterprise. It aims to increase the enterprises capacity or productivity or change its management control. In an FDI, the capital inflow is translated into additional production. The FII investment flows only into the secondary market. It helps in increasing capital availability in general rather than enhancing the capital of a specific enterprise. The Foreign Direct Investment is considered to be more stable than Foreign Institutional Investor. FDI not only...
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... 2011SMF6623 Nitesh Goyal 2011SMF66 Sajal Agarwal 2011SMF66 Contents Description | Page No. | | | | | | | | | | | | | | | | | | | | | | | Impact on India | | Impact of FDI in India | | Snapshot of impact on India | | Conclusion | | References | | Impact on India Though India is primarily a domestic economy, India’s exports are positively linked to the global economic growth. This is likely to adversely impact India’s export growth in the coming months. However, growth will be only marginally affected by the slowdown in the euro region debt stricken countries as our exposure is low. Software services and other export oriented sectors would benefit from the rupee depreciation. FDI has not been significantly affected by the crisis while the FIIs are showing outflow in the last couple of months. International commodity price moderation is not being translated in domestic prices. Inflationary Concerns: Further, exchange rate depreciation would worsen the inflationary conditions in the economy. Therefore, the RBI would have to continue with its anti-inflationary stance in the near term if domestic conditions do not improve Source: World Bank, Ministry of Commerce, Government of India Interpretation of Graph - Graph 1 show that the share of the euro zone exports to their GDP was around 40% in 2010 and has been around 39% on an average since 2005. This was followed by China at 30% and UK...
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...International Journal of Engineering and Science ISSN: 2278-4721, Vol. 1, Issue 5 (October 2012), PP 34-42 www.researchinventy.com Role of Foreign Direct Investment in India: An Analytical Study 1 Dr. Jasbir Singh,2Ms. Sumita Chadha,3 Dr. Anupama Sharma 1 Associate Professor, Maharaja Surajmal Institute, Janakpuri, Delhi Assistant Professor, Maharaja Surajmal Institute, Janakpuri, Delhi 3 Assistant Professor, Maharaja Surajmal Institute, Janakpuri, Delhi 2 Abstract: International Economic Integration plays a vital role in Economic Development of any country. Foreign Direct Investment is one and only major instrument of attracting International Economic Integration in any economy. It serves as a link between investment and saving. Many developing countries like India, are facing the deficit of savings. This problem can be solved with the help of Foreign Direct Investment. Foreign investment helps in reducing the defect of BOP. The flow of foreign investment is a profit making industry like insurance, real estate and business services and serving as a catalyst for the growth of economy in India. The present study is based on the objectives like (a) to know the requirement of amount of foreign investment by India, for its economic Development and (b) to analyze the trend and role of FDI & FIIs in improving the quality and availability of goods has been beyond doubt. To analyze all these objectives data has been gathered through secondary sources like reports...
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...| | | Foreign Direct Investment | | | | | | Marking its second investment in India, Warren Buffet’s Berkshire Hathaway will induce investment in a chlorinated polyvinyl chloride (CPVC) industrial unit in Gujarat, through its wholly owned subsidiary Lubrizol Corporation. Lubrizol will initially invest Rs 1,177 crore (US$ 242 million) in the project and its construction work is expected to commence by January 2013.In order to tap more foreign funds, Cox and Kings has got the nod from Foreign Investment Promotion Board (FIPB) to increase its foreign equity by 10 per cent to 53.94 per cent, from the previous 43.81 per cent. Currently, foreign promoters have a stake of 19.87 per cent and FIIs hold 22.72 per cent. FIPB has granted its approval to the travel company to raise Rs 750 crore (US$ 154 million) from foreign markets.Meanwhile, Singapore-based Global Schools Foundation plans to invest Rs 300 crore (US$ 61.6 million) and start 25 schools in India over 2011-16. The foundation owns and operates Global Indian International Schools (GIIS) and Global School of Silicon Valley (GSSV) across eight countries all over the world.Policy InitiativesRecently, the government has further liberalised the FDI mechanism for allowing overseas investment in bee-keeping and share-pledging for raising external debt.Moreover, it has eased FDI norms for construction of old-age homes and educational institutions. The modification endorses removal of issues pertaining to the minimum...
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...The essential facts/rules/regulations the NRIs must know NRI Guide 2012 2012 A Comprehensive Guide for Indians residing outside India Prakash Nair Prakash@yourownadviser.com www.yourownadviser.com . 1|Page NRI GUIDE (Ver 1.00) (A Comprehensive Guide for Indians residing outside India) Prepared by Prakash Nair Prakash@yourownadviser.com www.yourownadviser.com 2|Page NRI Guide 2012 www.yourownadviser.com PREFACE This NRI guide has been compiled with the help of information available in official website of various government departments like Reserve Bank of India, Income Tax Department, Government of Kerala and other reliable sources. I have taken adequate care to provide current and authentic information. This NRI Guide is intended to serve as a ready reference book to guide NRIs on various matters affecting their financial and other related subjects. This does not purport to be a legal document. So I am not sure that, any errors occurred while compiling this reference guide. In case of any variation between what has been stated in this NRI Guide and the relevant Act, Rules, Regulations, Policy Statements, Government Orders/Circulars etc., the latter shall prevail. Kindly note that, rules related to NRIs are subject to change. Errors and omissions are expected. Ver.2 of this NRI Guide will be published soon with more useful information. Prakash Nair Prakash @yourownadviser.com www.yourownadviser.com Date : 12-Jan-2012 Your suggestions,...
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...8 | -0.8 | 23.4 | 34.5 | Average Exchange Rates | | | | | | | 45.25 | 40.26 | 45.99 | 47.42 | 45.56 | 51.25 | WPI (% change) | 6.6 | 4.7 | 8.1 | 3.8 | 9.6 | 9.1 | CPI (% change) | 6.7 | 6.2 | 9.1 | 12.4 | 10.4 | 8.4 | Current Account Deficit(% GDP) | -1.0 | -1.3 | -2.3 | -2.8 | -2.7 | -3.7 | FDI Inflows( in mn) | 503573 | 797356 | 1397255 | 1309799 | 960150 | 1273623 | FII Inflows(in mn) | 14640 | 43325 | 8311 | 50361 | 41597 | 39177 | Macroeconomic variables are indicators that signal the current trends in the economy. Major challenges of macroeconomic policymaking include managing growth and price stability. After growing at 8.4% for 2009-10 and 2010-11 the growth rate fell down to 6.9%. This indicates a slowdown compared not just to the previous two years but 2003 to 2011 (except 2008-9). However, by any cross country analysis India remains among the front-runners. With agriculture and services continuing to perform well, India‘s slowdown can be attributed almost entirely to weakening industrial growth. Monetary policy was tightened by the Reserve Bank of India (RBI) during the year to control inflation and curb inflationary expectations. The slowing inflation reflects the lagged impact of actions taken by the RBI and the government. Reflecting the weak manufacturing activity and...
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...FIIs invest Rs 3160 cr in equities this month so far Overseas investors continue to invest in the stock markets with pumping over Rs 3,160 crore in equity shares in this month so far. From November 1-9, foreign institutional investors (FIIs) were gross buyers of shares worth Rs 15,350 crore and sellers of equities worth Rs 12,184 crore -- translating into net inflow of Rs 3,166 crore, according to the Sebi data. This takes the FII investment in the Indian equity market to Rs 96,861 crore (USD 18.62 billion) in 2012 so far. Experts said FIIs continued with the positive bias towards Indian equities on account of the reform initiatives taken by the government that have strengthened chances of better economic growth and improved market sentiment. FII inflows will continue in the coming months as the country is riding on positive news flows, they said, adding that the lack of investment options make India an attractive destination. This month, apart from pouring funds in equities, FIIs also infused Rs 436 crore in the debt market. "The inflows into domestic equities continued on the government's reform measures and I hope it will continue in the coming months as well," Wellindia vice-president Research Vivek Negi said. Kishor Ostwal, Head at CNI Research, said, "Steps taken by the government are being seen as market friendly by investors and in my view FIIs will continue to react positively on the domestic equity market." However, the BSE barometer Sensex...
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...foreign ownership has reached its peak and is expected to rise further as corporate profitability grows. However, factors such as high inflation and corruption may result in overseas investors being careful with their actions. As a result of year 2010, foreign institutional investors (FIIs) shareholding rose to the highest level since Indian markets opened up to foreign investment in 1993. In addition, strong corporate earnings had made India the top investment destination in 2010. As India is the second fastest growing major economy in the world after China, it is likely to attract higher investments in the future. Although the growth potential outlook for India remains positive, it is susceptible to correction due to is top priced trading compared to other markets. The threat of high inflation and rising crude prices resulting in a slow-down of growth and corporate profitability has affected the foreign investors action. The moderation in foreign flows has led to a decline in stock prices. An increase in FII shareholding was detected in sectors, such as consumer goods, pharma, metals, large software firms and telecom service providers. In banking and financial industry, however, the FIIs stakes were lowered as well as in most construction firms. The trend in foreign inflows in the future will depend largely on whether macroeconomic concerns such as inflation abate as well as on policy initiatives in the national budget to be tabled in Parliament next month. According...
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...1 year. In the article we will try to study the concerns of a country facing depreciating currency, the factors that led to this depreciation and the measures government can take to stabilize the situation. Most importantly we will see if global economic uncertainty rides over all the other domestic factors to determine strength of a currency especially in developing economies. Why don’t we need a depreciating INR? The persistent decline in rupee is a cause of concern. Depreciation leads to imports becoming costlier which is a worry for India as it meets most of its oil demand via imports. Apart from oil, prices of other imported commodities like metals, gold etc will also rise pushing overall inflation higher. Even if prices of global oil and commodities decline, the Indian consumers might not benefit as depreciation will negate the impact. The depreciating rupee will add further pressure on the overall domestic inflation and since India is structurally an import intensive country, as reflected in the high and persistent current account deficits month after month, the domestic costs will rise on account of rupee depreciation. Exchange rate risk also drives away foreign investors which in turn depreciates the local currency. Indian Rupee is currently caught in this vicious cycle; it will have to find a stable level to regain investors’ confidence. The depreciating rupee has serious effects on the external debt figures of the nation. The total external debt has increased by Rs...
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...Department of Industrial Policy and Promotion Ministry of Commerce and Industry Government of India CONSOLIDATED FDI POLICY (EFFECTIVE FROM APRIL 5, 2013) Government of India Ministry of Commerce & Industry Department of Industrial Policy & Promotion (FC Section) CIRCULAR 1 OF 2013 SUBJECT: CONSOLIDATED FDI POLICY. The “Consolidated FDI Policy” is attached. 2. This circular will take effect from April 5, 2013. (Anjali Prasad) Joint Secretary to the Government of India D/o IPP F. No. 5(1)/2013-FC.I Dated the 05.04.2013 Copy forwarded to: 1. 2. 3. 4. 5. Press Information Officer, Press Information Bureau- for giving wide publicity to the above circular. BE Section for uploading the circular on DIPP's website. Department of Economic Affairs, Ministry of Finance, New Delhi Reserve Bank of India, Mumbai Hindi Section for Hindi Translation 1 INDEX DESCRIPTION PAGE NUMBER CHAPTER-1 INTENT AND OBJECTIVE 1.1 Intent And Objective 5 5 CHAPTER-2 DEFINITIONS 2.1 Definitions 7 7 CHAPTER-3 GENERAL CONDITIONS ON FDI 3.1 Who can invest in India? 3.2. Entities into which FDI can be made 3.3 Types of Instruments 3.4 Issue/Transfer of Shares 3.5 Specific conditions in certain cases 3.6 Entry routes for Investment 3.7 Caps on Investments 3.8 Entry conditions on investment 3.9 Other conditions on Investment besides entry conditions 3.10 Foreign Investment into/Downstream Investment by Indian Companies 13 13 15 17 20 26 29 30 30 31 31 CHAPTER-4...
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