Strategy of FIIs to Invest in Indian Stock Market

Today, this fact is not hidden from Indian investors that FIIs affect the Indian stock market. FIIs can affect stock exchange when they withdraw all their money from Indian stock market, at that time, value of shares go down and Indian Investors' share capital value decreases fastly.

On the other side when foreign investors invest money in specific company, share prices go up. So, Indian investors get benefit from this. So, keep eye on the strategy of FIIs.

To understand the strategy of FIIs to invest in Indian stock market is very necessary to small Investors of India. For this, we have to understand following things.

1. In which Companies FIIs Invest their Money

Mostly FIIs have invested money in following companies.

Axis Bank
M& M
Tata Power company
Sun Pharma

2. Strategy of Ceiling on FII investment in Indian Companies 

RBI has fixed the limit of FII's investment. FIIs can not invest more than 24% of the paid up capital of Indian company. NRIs can not invest the 10% paid up of the Indian company. But some Indian companies has obtained the exception from this ceiling limit. Indian investors should understand, FIIs can Invest 49% to 62% of the paid up capital in some private companies in India. RBI has issued its notification and as Indian Investor, you should study at here.

Except checking above, Indian Investors should understand FIIs are also human being like you and me. If they will feel the risk of their investment, they will withdraw their money. So, investment strategy of FIIs is dependent on the performance of company, market value of its shares, Indian economic stability and Indian political stability. For example, recently, FIIs has invested $ 2 billion in Govt. debt for this year only because in 2014, election will be start and there is the chance of coming other parties and there may be new laws come into existence. So, FIIs do not want to invest long run in Indian Govt. debt.

One of point which I want to mention in the end, FIIs can also withdraw the money if their countries start to give high return on their return with security of their investment.

Related : FII and its Role in Capital Market


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Accounting Education: Strategy of FIIs to Invest in Indian Stock Market
Strategy of FIIs to Invest in Indian Stock Market
Accounting Education
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