Foreign institutional investors and security returns: evidence from Indian stock exchanges

Ananthanarayanan, Sandhya and Krishnamurti, Chandrasekhar and Sen, Nilanjan (2009) Foreign institutional investors and security returns: evidence from Indian stock exchanges. In: 7th INFINITI Conference on International Finance 2009 - Credit Markets, Credit Institutions and Macroeconomic Volatility, 8-9 Jun 2009, Dublin, Ireland.

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India liberalized its financial markets by opening its doors to foreign institutional investors in September, 1992. We study this landmark event, by examining the impact of trading of Foreign Institutional Investors on the major stock indices of India. First, we find that unexpected flows have a greater impact than expected flows on stock indices. Second, we find strong evidence consistent with the base-broadening hypothesis. Third, we do not find any evidence that foreign institutional investors employ either momentum or contrarian strategies. Fourth, our findings support the price pressure hypothesis. Finally, the claim that foreigners’ destabilize the market is not substantiated.

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Item Type: Conference or Workshop Item (Commonwealth Reporting Category E) (Paper)
Refereed: Yes
Item Status: Live Archive
Additional Information: No evidence of copyright restrictions.
Faculty / Department / School: Historic - Faculty of Business - School of Accounting, Economics and Finance
Date Deposited: 31 Jul 2010 13:02
Last Modified: 02 Jul 2013 23:38
Uncontrolled Keywords: foreign institutional investors, momentum and contrarian strategies, market destabilization
Fields of Research : 15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150201 Finance
Socio-Economic Objective: B Economic Development > 90 Commercial Services and Tourism > 9001 Financial Services > 900101 Finance Services

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