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Conclusion

From all the above discussions and data analysis, we conclude that FII has a major impact in Indian stock market. Particularly, the fall on October 17, 2007, in which just a
speculation about governments plan to control P-Notes had caused the biggest fall in Indian stock market, even market had to be closed for one hour without trade. The impact is that even the domestic players and MFs also follow a close look on FIIs. So if FIIs are confident in Indian markets, there is a general perception that market is on a song.

We had also found that the major (almost 50%) of FIIs' investments are from P-Notes. So it implies that major forces behind the FII investments are anonymous. This has a negative impact on stock market. Because money launders and even terrorists use this facility to pump money to Indian market and their sudden withdrawal causes volatility in markets.

From the graphs drawn in the above parts, we can see that the major falls in stock market is accompanied by the withdrawal of money by FIIs. So there is a direct relation between the FII's money flow and the movement of sensex. The biggest fall in stock markets occurred in 2007 and 2008. This means the volatility of market is more because during this period there was an increase in registration of FIIs and the investments reached almost Rs. 283468.40 Crores by the end of 2007. The present condition is that the investments had reduced by 9% to 255464.40 Crores as on September 5. So this reduction is one cause of volatailty. This can be. In 2008, the net buying is only Rs. 5603 Crores compared to Rs. 36,869 Crores in 2007. From all this, we can analyze prime facia that the FIIs influence market.

References