indigenerasi

Captain Jack Sparrow in the movie “Pirates of the Caribbean” was forced ashore by a mutinous crew. We see stranded on an island drinking rum with his beautiful wife beside a fire. They discuss his ship. “This is not just a keel and a hull and a deck and sails. That’s what a ship needs. But what a ship is the Black Pearl really is … It is the Freedom. “ As an investor idealistic youth in the 80s I felt the same way on the investment of my retirement savings. These investments represent financial freedom. With the passage of time life becomes more complicated decipher financial statements and review all investment options can leave us perplexed. We can have a meaning, the ship ran aground. We feel disconnected from the original meaning or purpose of our investments. We do not know if our money is working for us and if it works in a manner that concerns us. How can we get back to basics and regain our sense of direction? What is the investment really means for us personally? When we invest in stocks or bonds we are essentially investments in companies. Consider an example of an investment in a small local company. A sausage maker is trying to raise half a million dollars to start his business. You may know the chef personally, or if you know his reputation. You liked the product and respect for his passion and commitment to make a wonderful sausage using the finest organic ingredients. A number of people come together to invest in this company. They could lend to the company (becoming bondholders) or to provide equity (shareholders become.) Investors provide the capital that allows the company to be born. Think about the importance of collective investments and the value they bring. Provide all the capital itself could be a huge risk for personal sausage maker. Thus, the risk is shared between the investors, none of them assumes a risk that he or she can not afford. In fact, every investor can benefit financially while meeting the needs of the community in a delicious manner. The act of investing is an important and essential in our economy. On a personal level, you the investor have put your hard earned money in this project for various reasons, some may be proud to be involved in such a high quality product, a belief that people like sausage and s ‘expects that you will receive a good return on your investment. You appreciate the commitment of man to sustainable practices. You believe in his ability to be a good manager and steward of capital attention that you have placed in his hands. As with any investment involves risk, but you feel that you can understand. The company may fail after a few years or you might not get the return you had hoped. You invested with the sausage maker according to your priorities and values, some of which you share with him. You care about its success not only because you want a good return on your money, but also because you like its products. Your life seems richer for having experienced. The relationship between the company and you as an investor is very real and very personal. Investing for our retirement now seems so far away from this paradigm. How to invest in a 401K, an IRA or a mutual fund has this kind of meaning? Making choices is not like here to invest with the sausage maker. You own stocks and mutual funds. Are the managers of these companies or funds of people you know and trust? Do you have the same faith in them as you do in the sausage machine? Do you make decisions that reflect your priorities and your values? Of course, we care about our investments and realize they are important. They can make the difference between living and be able to afford to do some of these things we’ve always dreamed of. However, this type of investment is not the same as putting your money with the local lads, whose success we are rooting for. Investing can start to become more personal checking with yourself. Remember why you invest. What is your investment really for you? They may represent financial freedom. Maybe they are your safety or the potential to live your dreams. They can give your children the head start that you never had. As you can expect the manufacturer of sausages at a careful steward of the investment you have entrusted to him, your first responsibility is to invest. Your investments are important assets in your life. By making investments more personal than you will learn a greater appreciation of them and increase your chances of success in the process sense. How can you create a sense of purpose and meaning in regard to your investments? The very act of investing demonstrates a belief in our country and our way of life. Your capital is valuable and important. How will you invest is important. Investing in medical research promising or a kindergarten in a dilapidated urban area you can get a financial return on your money while strengthening your belief in companies you feel are worth supporting. Naturally, you need to balance these two objectives to protect and grow your nest egg. Examine each investment by asking: “Is it working for me, and in a way that supports my priorities and vision for the future?” Investing can be as personal and meaningful that you choose to do so. You are the captain of your ship.

Defined in the field of statistics Bell Curve, the long tail that reside in the skinny tail at the borders. The long tail, as regards goods and services, refers to the evolution away from supply to consumer products for more niche services. The Internet reduces the costs of establishing distribution channels, the ability of entrepreneurs to focus more on the cute sector to meet their individual needs wins growing attraction. However, almost nobody is talking about the long tail of the investment. For me, cute investment strategies are the strategies that rely heavily on fundamental analysis or technical, but exploit other strongly predictive factors to produce not only higher returns than traditional investment strategies, but also opportunities investment with the risk-reward paradigms much better than those produced by traditional investment strategies. Here are 10 reasons why the darling of the investment is the only way to create wealth. (1) You’ll never reach the level of wealth that you want by handing over your money to a company investment. The vast majority of private investors against their money to large institutions and allow them to invest their money for them. If this were really the best way to achieve financial freedom, then almost everyone you know would be ecstatic with their financial advisor. Think about how many people do you know what is absolutely rave about their financial advisor. The fact that 90% of people you know do not rave about their financial adviser must tell you that the niche investment strategies, investment strategies or cute, are far superior. Those who are happy with the large investment houses have already been independently wealthy before requesting help. Think about how many people you know you’ve always said, ‘I was not rich before, but thanks to my investment firm, I’m rich beyond my dreams. “(2) Thanks to the evolution of information technology, there are better ways and more highly predictive of making investment decisions than just utilizing fundamental and technical analysis. Even if people have been very slow to grasp this, once they do, cute investment strategies, such as those invented by SmartKnowledgeU??, Will boom. There is no doubt that the level of high-end financial, political and institutional available to the average investor has increased by leaps and bounds in the last decade. There is a virtual treasure map that was created by flattening the world during the last decade the selection of titles that are about to explode. However, because the larger investment institutions most powerful in the world have kept the masses of investors set on traditional investment techniques such as value and fundamental analysis, the darling of investment strategies is currently a large backlog in its developmental phases than it should be. The best analogy I can use to explain why people have ignored the long tail investment strategies is to compare it to the incredibly slow adoption of Internet Protocol version 6 (IPv6) by the United States. When China started preparing its country for IPv6 a decade ago, the benefits in terms of increased security and its added value properties in e-commerce were evident even then. However, people in the U.S. were comfortable with any IPv4 does not take action until the progress and the Internet and higher capacities Business China, Korea, Taiwan, Hong Kong and the United States finally embarrassed enough to go ahead and catch up with Asia. I see the same thing happens in the field of education investment. Everyone is comfortable with traditional investment strategies that have been reproduced for the past decades so nobody sees the need to move forward even if strategies exist much today. As with IPv6, the world will understand that the safest and best investment of the money reside in the cute, and they will eventually adopt these strategies. (3) with a certain skepticism of investors as a moral integrity caused by past accounting scandals at Enron, WorldCom, General Motors, etc., and the current, ongoing scandals retroactive option, investors are looking more and more other ways to make investment decisions other than crunching numbers they deem untrustworthy. In addition, technical analysis often yields false positives as well. A table gives the clues seem optimistic that have just broken through a ceiling of resistance only to have the index turn back downward for a period of time, or a graphic that appears bearish just broken through a floor of resistance than to turn around and begin another climb upward. In fact, you’ve seen some of these trends with some recovery of technical posts that I put on my blog in months. In fact, that’s why I always say I do not rely solely on technical indicators to make my decisions. I rely solely on technical indicators to confirm or deny what my long tail investment strategies tell me. Of the three types of analysis, fundamental part of the tail, technical and investment strategies long long tail yield far fewer false negatives and false positives. That’s why I rely on them so heavily. This feeling will lead to changes in investment strategies cute, and the discovery of more effective and better ways of predicting investment decisions that even those that already exist. Even the current investment strategies cute, like those used SmartKnowledgeU?? are evolving as access to reliable information increases every year. Make decisions as if you were a fly on the wall of boards is no longer a fantasy. It is possible, thanks to the changing information landscape. (4) With the growth of blogs and news sites purely on the web, the stranglehold of global investment myths, including the modern theory of portfolio diversification, will soon be exposed for what they are – cleverly disguised marketing strategies masquerading as investment strategies. Once people realize it, cute investment strategies will gain wider acceptance, as well as acupuncture and herbal medicine eventually gained credibility as healing regimens in the schools of Western medicine. The information age has stripped many accepted investment strategies such as diversification of much use in trying to create wealth. In addition, he also made these beliefs as an inability to anticipate the market and the market model effective than mere myths. This has been proven time and again by sites such as investment SmartKnowledgeU?? which called for strong market corrections in certain global markets and asset classes like gold with a constant precision. (5) Wider acceptance of others, investment strategies cute as far more efficient than those used by global investment firms will happen as word of success through these strategies spread throughout the world via the Internet. The internet distribution channel can and will be used to change the mindset of investors. (6) Do-it-yourself shops are booming – with the success of books such as Stephen Covey’s “The Eight Habit” which emphasize personal responsibility for achieving excellence by handing control over to someone the other, cultural change will happen whereby people will seek to take control over their own financial future cons just give money to a business to run. As this cultural shift happens, multitudes of people will realize they are short-circuited their returns significantly every year by handing money to global investment houses. (7) The flattening of the world and access to investment information previously inaccessible undoubtedly produce an increasing amount of investment strategies that reside in the cute. People will realize the folly of believing in the idea that an investment strategy on them by global investment houses for the last half century as “the only viable and safe way to invest.” If the younger generation has an interest in investing, adding their creativity to the arena of investment will lead to an explosive growth in the Tenderloin investment strategies. However, given the probability of this event are quite low, a more gradual change towards investment strategies niche is far more likely. (8) The explosion of social networking sites like YouTube, MySpace, Friendster, Squidoo, Digg, etc., will amplify the viral marketing investment concepts cute. Again, ignorance of investment strategies cute causing fear and hesitation to use them. Viral marketing investment concepts mignon million increase comfort level of investors in these different concepts and unique. (9) People are interested in profitability in the end, no matter how much global investment firms try to separate themselves from their competitors with smoke and mirror service requests. All suites appreciation for luxury box at Los Angeles Lakers games, suites at the Four Seasons Hotel, conference golf course and world class resorts fade quickly once people realize how much money they win with investment strategies cute. (10) Again, because people are ready to abandon all the benefits they receive as a preferred customer at a major investment firm for far superior returns on their portfolios by investing cute eventually reach a critical mass. Finally, the darling of the investment will migrate toward the center and become the standard methods of investment, but it may take several decades to occur.

INTRODUCTION One salient feature of globalization in the financial services industry is the increased access is granted to non-local investors in several major securities markets worldwide. Increasingly, stock markets of emerging markets to allow institutional investors to trade in their domestic markets. Indian stock market opened to foreign institutional investors in 14th September 1992, initially with many restrictions. The regulations themselves are now liberalized and minimized, since 1993, has received a considerable amount of foreign portfolio investment as if FIIs investment in shares. This became a turning point in India’s stock market. The Indian government has announced government policy to allow FII investment in India’s capital market. According to the SEBI has amended the Regulation on 14-11-1995. To make investment in India’s stock market they wanted to register with the Securities and Exchange Board of India, foreign institutional investors. It is possible for foreigners to trade in securities without being registered in India as foreign institutional investors, but these cases must be approved by the Reserve Bank of India or the foreign policy of the Council of Institutional Advancement. They are usually concentrates on the secondary market. Domestic market alone is unable to meet the growing demand country’s capital and financing of the institution has lost primary mutilated in emerging countries in the world order. Besides aimed primarily at ensuring non-debt capital inflows at a time of extreme balance of payments crisis. It was binding on the balance of payments crisis in the early 1990s Portfolio flows often called “hot money” flows are notoriously volatile capital. They were also responsible for the spread of financial crisis contagion in international market. Evan, however, the FIIs have been exercising a key role in financial markets since their entry into this country. The portfolio flows explosives by FII brings with them great benefits because they are engines of growth, lowering the cost of capital in many emerging countries. The opening of capital markets in emerging countries has been perceived as beneficial by some researchers, while others are concerned about possible negative consequences. Clark and Berko (1997) emphasize the benefits of allowing foreigners to trade in stock markets and outline the basis of “enlargement” hypothesis. The perceived benefits of broadening the tax base resulting from an increase in investor base and the consequent reduction of the risk premium due to risk sharing. Other researchers and policymakers are increasingly concerned about the risks associated with commercial activities of foreign investors. They are particularly concerned about the breeding behavior of foreign institutions and the destabilization potential of emerging stock markets. This study addresses these issues in the context of foreign institutional investors (FII), commercial activities in a market of big emerging countries – India. India has liberalized its financial markets and FIIs allowed to participate in their domestic markets in 1992. Apparently, this openness has led a number of positive effects. First, the stock exchanges were forced to improve the quality of their trading and settlement in accordance with best practices in the world. Secondly, the information environment in India improved with the arrival of large international financial institutional investors in India. On the negative side, we must consider potential destabilization as a result of the trading activity of foreign institutional investors. This is particularly important in an emerging country that has initiated reforms to open its markets. OBJECTIVES The objectives of this study were as follows; (1) To investigate the role of FII investment in Indian stock market (2) To examine the causal relationship between net FII investment and the BSE Sensex using the test of Granger causality (3) To examine the causal relationship between net FII investment and NSE sensex using the test of Granger causality (4) To examine whether FIIs were a channel of disturbance on the overall Indian stock market. TOOLS: study was conducted with the help of unit root test, co integration test, regression and causality F statistics FII investment and the index of the BSE and NSE LETERATURE COMMENTS Gayathri Devi. R in 2003, she has conducted studies on “Causal Relationship between FIIs and Stock Market: A critical study. He revealed that there were long term between net FII investment and the Sensex, FII investment did not respond to short term changes or technical position in the market and they were directed more by fundamentals and FII investment has Granger cause stock markets in India. “Serisoy Selen Guerin” in 2006, a study on “The role of geography in financial and economic integration: a comparative analysis of foreign direct investment, trade and flows of portfolio investment. . She found support for the argument that most FDI among industrial countries were horizontal, whereas most FDI investment in developing countries was vertical, and our results indicated that the investment portfolio, compared to FDI flows have been very sensitive to changes in GDP per capita, this implies that if there was a stock of negative output flows of portfolio investment are more volatile than FDI. A. Julia Priya, D. Lazar and Joseph Jeyapual in 2005, they conducted the study on the role of foreign institutional investors on the development of stock markets in India, “The results showed that sensex market capitalization of NSE, the turnover of BSE and NIFTY without market capitalizations were influenced by foreign institutional investors “Suchismita Bose Dipankor coondoo in 2004, they conducted the study on” The Impact of FII Regulations in India “. These results strongly suggest the liberalization policies had the desired expansionary effect and had increased the average level of FII inflows and / or sensitivity of these flows to a change in BSE returns and / or pal Parthapratim 2004 study entitled as “Recent volatility in stock markets in India and foreign institutional investors. The results of this study indicated that foreign institutional investors has emerged as the most dominant group of investors in the domestic stock market in India. In particular, in societies that constitute the market values of Bombay sensitivity index, their level of control was highinertia even those flows. Study “Sandhya Ananthanaryanan, Krishnamurthi Chandrasekhar and Sen Nilajan conducted in 2003 as” The foreign institutional investors and Security Returns: Evidence from Indian Stock Exchanges “, he found strong evidence consistent with the broadening of the base case. He ‘ has not found convincing confirmation regarding the pace or against the current strategies employed by FIIs. It supported the hypothesis of price pressures. It found no basis for the assertion that “foreign” to destabilize the market. J. S. Pasricha and Umesh. C. Singh in 2001, attempted to analyze the impact of investments in the Indian capital market FIIs. Their study revealed that FII are here to stay and become part of the Indian capital market. Their input has led to greater institutionalization of the market. They have made transparency in the functioning of the market. SSS Kumar in 2001, tried in his closet to find the impact of FIIs on the Indian stock market. The inference analysis of the document suggests that FII investments are driven more by market fundamentals rather than by the money changers in the short term or a technical position in the market. According to K. Seethapathi and V. Subbulakshmi study entitled “Foreign investment: Need for focus”, they concluded that the flows are picking up. The political will must be demonstrated by the government. In addition, regulators should identify the reasons for failure in conversion approvals to real investment and these issues must be addressed immediately. E. Han Kim and Vijay Singal in 1997, they conducted the study “are open to cheap foreign investors and emerging economies?” A Conclusion revealed. The integration of stock markets in emerging global markets has had benefits and continue to have benefits for both international investors and host countries. The end result of integrated markets for better allocation of resources , improve capital productivity and a higher standard of living. THEORETICAL CONSIDERATION Between late 1990 and mid-1991 the economy facing serious balance of payment difficulties, approaching default on its external payments obligations in January and June 1991. In January 1991, the government negotiated with the International Monetary Fund (IMF) for loans. This was followed by the implementation of standard IMF prescription of the World Bank’s short-term stabilization, consisting of the devaluation, the temporary import compression, compression fiscal and monetary policy with a higher rate of interest, followed by longer-term “structural adjustment” measures aimed at restructuring the national economy. The new economic policy was a result of implementation of the structural adjustment program. The “economic reforms” or “economic liberalization program, which began to be implemented with the announcement of the New Economic Policy (NEP), with vast changes in industrial policy, trade policy and the policy foreign investment, a redefinition of the role of public sector in the economy and to review the architecture of the national financial system. By narrowing the topic, first it focuses on the liberalization of capital account. CAPITAL ACCOUNT LIBERALIZATION The process of capital account liberalization in India must be located in its broader context, as it has been shaped by the reality in the national context and conditions in the international context. In response to the crisis of external debt, which surfaced in 1991, the Government has initiated a process of stabilization, adjustment and reform. Economic liberalization and structural reforms have sought to increase the openness of the economy through trade flows, investment flows, technology flows and capital flows. The process has begun the introduction of convertibility of the trade that quantitative restrictions on imports, except for consumer goods have been dismantled and tariffs were reduced. It has been combined with a liberalized foreign investment regimes and foreign technology. And restrictions on international economic transactions, including capital flows have been gradually reduced. This process was also influenced by the accelerating process of globalization has been associated with increasing economic openness in trade flows, investment flows and financial flows. The approach to capital account liberalization in India has been much more cautious. What has been the liberalization has been specified. Everything else has been limited or prohibited. The contours of the liberalization of capital account have been largely shaped by the salutary lessons of the crisis of external debt that has surfaced in early 1991 and brought India close to default in meeting its international obligations . The balance of payments, then, was almost unmanageable. The vulnerability is exacerbated by two factors: it has become extremely difficult to refinance short-term debt on international capital markets and there was capital flight in the form of withdrawals of deposits held by non-resident Indians. This experience has dictated the parameters of the capital account liberalization8. It prompted strict regulation of external commercial borrowing especially short-term debt. It led to a systematic effort to discourage volatile capital flows associated with non-resident deposits repatriable. Most important, perhaps, he was responsible for the change of emphasis and the shift of preference from debt creating capital flows non-debt creating capital flows. To some extent, the liberalization that was introduced was also influenced by the perceived needs of the economy: financing the current account deficit, mobilizing resources for investment and attracting international companies. But the convertibility of capital account has remained, happily, in the field of rhetoric. The Mexican crisis in late 1994 was, ironically, a boon for India. It was not only an early warning signal. It has dampened the enthusiasm of those who advocate the liberalization of capital account with a big bang. It has lent support to those who questioned the wisdom of capital account convertibility that would have been premature in all directions. The contours of the capital account liberalization in India have been determined by these factors. In sketching the contours, it is necessary to distinguish between different forms of private capital inflows and outflows, as there are important differences between these categories in the nature and degree of liberalization. A complete description would be too much of a digression. For our purposes it is sufficient to consider the contours of liberalization in the following categories of capital transactions: • Direct investment, • The investment portfolio, and • The non-resident deposits. Foreign Direct Investment It is defined as a long term investment by a foreign direct investor in an enterprise resident in an economy other than that in which the foreign direct investor is based. The FDI relationship consists of a parent company and a foreign affiliate which together form a transnational corporation (TNC). In order to benefit from FDI the investment must allow inspection of the parent company on its foreign subsidiaries. The liberalization policy for foreign direct investment began in July 1991 with two major decisions. First, foreign direct investment with a maximum of 51 per cent equity was to receive automatic approval in selected areas of high priority subject of a registration procedure with the Reserve Bank of India. Secondly, a Foreign Investment Promotion Board has been constituted to consider all other proposals for foreign direct investment, when approval was not limited by pre-determined parameters and procedures. Indeed, this has created a double track for inward FDI. Approval is automatic, within specific parameters, the Reserve Bank of India, while all other entries have been submitted for approval by the Council to promote foreign investment. Access through the automatic route has been gradually expanded over time. Needless to add, outputs associated with foreign direct investments are not subject to any restriction, but this was so even in the era of capital controls. Foreign portfolio investment (FPI) Portfolio investment represents passive holdings of securities such as foreign stocks, bonds or other financial assets, none of which requires active management or control of the issuer of securities “by the investor, where such control exists, it is known that direct foreign investment. The liberalization policy has been extended to portfolio investment in September1992. For starters, foreign institutional investors such as pension funds or mutual funds were allowed to invest in the subject of domestic capital market simply to register with the Council of the Securities and Exchange Commission of India. Guidelines issued by the Reserve Bank of India permitted such foreign institutional investors to invest in the secondary market in equity subject to a ceiling 5pers cent (subsequently increased to 10 per cent) for individual foreign institutional investors in a single Indian company, with an overall limit to 24 per cent of capital (later relaxed to 30 per cent of equity at the option of the company) for the total foreign institutional investment in a single Indian company. Foreign portfolio investment in further classified 1. FIIs 2. ADRs / GDRs, and 3. Offshore funds. Foreign institutional investors (FIIs) Whoever proposes to invest their proprietary funds or on behalf of “broad” or funds and foreign companies and individuals belong to one of the subcategories data can be recorded for IFI. • Pension Fund • Mutual Funds • Investment Trust • The insurance or reinsurance • Endowment Fund • University funds • Foundations or charitable trusts or charitable organizations which intend to invest for their own account, and • Asset Management Companies • Nominee Companies • The institutional portfolio managers • Administration • Power of Attorney holder • Bank Access was provided to foreign institutional investors in the secondary market for debt. Shortly afterwards, the foreign institutional investors were also allowed investment or investment in the primary market, subject to the approval of the Reserve Bank of India, with a maximum of 15pers percent of the new issue. It took some time before the foreign institutional investors were allowed investment in Treasury securities on the primary and secondary markets. This happened in 1996-97 and was subject to the ceiling for external commercial borrowings. Subsequently, in 1998-99, foreign institutional investors were also allowed to invest in treasury bills. There are no reserve requirements stipulated, or taxes on these capital inflows. It should also say that foreign institutional investors are allowed to repatriate the principal capital gains, dividends, interest and any other receipt for the sale of financial assets, without limitation, the exchange rate market. The rate of income tax for dividends from portfolio investments and for foreign institutional investors is 20 per cent, which is much lower than the rate of corporate tax for domestic companies or foreign. But foreign institutional investors are subject to a higher short-term capital gains tax to 30 per cent against 20 per cent for domestic investors, while capital gains long term, the tax is the same 10 per cent. Sales of financial assets for repatriation are absolutely free, provided that such sales are in stock. However, the divestment by other means or in any form, requires the approval of the Reserve Bank of India. Global Depositary Receipt: Global Depositary Receipt A trade certificate is held in the bank of a country representing a specific number of shares of a security trading on an exchange of another country. American Depositary Receipts make it easier for individuals to invest in foreign companies, because of the widespread availability of price information, lower transaction costs, and distributions of dividends in due course. Also called European Depositary Receipt. The option’s investment portfolio has also been made available to national institutions, companies in September 1992. Indian companies were allowed access to international capital markets through global depositary receipts or Euro convertible bonds which converted debt into equity after deadline. This access, however, is not automatic. Applications from individuals, prepared unconformity with the general guidelines of the government, have been approved. This process remains unchanged. Offshore Funds: An offshore fund is a collective investment scheme domiciled in an offshore financial center, such as the BVI, Luxembourg, the Cayman Islands or Dublin. Similar facilities for the investment portfolio were then extended to offshore funds, non-resident Indians (as individuals) and foreign legal persons, only for investments in equities or bonds through scholarships under the same conditions as foreign institutional investors, but subject to a ceiling of 5 per cent for individual non-resident Indian or overseas corporate bodies in a single Indian company. Among the various components of the investment portfolio comprises mainly FII portfolio flows. The main objective of foreign institutional investors is to minimize risk and maximize returns by diversifying their portfolios internationally. Major determinants of investment decisions are IFI country and region specific. Portfolio flows often called “hot money” flows are notoriously volatile capital. They were also responsible for the spread of financial crisis contagion in international market. Evan, however, the FIIs have been exercising a key role in financial markets since their entry into this country. The portfolio flows explosives by FII brings with them great benefits because they are engines of growth, lowering the cost of capital in many emerging countries. The opening of capital markets in emerging countries has been perceived as beneficial by some, while others are concerned about possible negative consequences. Among the most active FIIs are Morgan Stanely Asset Management, Jardine Fleming, Capital International, J. schorder Henery, Templeton, Warburg Pinkers, Internatioanl Alliance and Quantum Fund. Foreign Institutional Investors in India India has opened its doors to foreign institutional investors in September 1992. This event represents an historic event because it has effectively in the global financial services industry. Initially, pension funds, mutual respect, mutual funds, management companies, the nominee companies and incorporated / institutional portfolio managers were permitted to directly invest in Indian stock markets. Beginning 1996-97, the group was expanded to include the registered funds of university endowments, foundations, charitable trusts and charitable. Since then, FII flows which form part of foreign portfolio investment have been growing in importance in India. Except for 1998, net flows were positive. The nuclear tests and the crisis in East Asia will slow the flow, but as stated Gordan and Gupta (2003), their effects were short lived. The percentage of net sales total of BSE, the percentage of the average FII sales and purchases increased from 2. 6 percent in 1998 to 5. 5 per cent in 2002. The cumulative net FII investment in India as in August 2003 is approximately $ 17,400 million. In August 2003 net FII investment was 9 percent of the market capitalization of BSE, which is low compared to market size. However, in the words of Banaji (2002), not market capitalization is important, but what is important is the level of free float, or shares that are actually available for public trading. With a floating stock in the Indian market is below 25 percent, about 35 per cent of the available free float has been bagged by FIIs – despite the fact that they invest in just a few highly liquid stocks. While India receives only 1 per cent of FII investment in emerging markets, portfolio flows to India have been less volatile compared to many other emerging markets (Gordan and Gupta, 2003). FIIs by adopting a bottom-up seem to invest in top-quality, high growth stocks of large capitalization (Gordan and Gupta, 2003). Sytse et al. (2003) provide empirical evidence that foreign institutional investors in India, investing in large liquid companies which enable them to exit their positions quickly at relatively low cost and also that foreign institutional owners have a greater impact than the foreign business owners when performance is measured using the standard stock market valuation. India is one of the most dynamic economies in Southeast Asia, promising growth of over 9 percent, second only to China, it would not be a surprise to see increased FII inflows into India the future. FIIs are now looking for the economy as a whole, with the macro-economic factors also play their role in attracting foreign investors. Factors like a strong currency, key reforms in banking, energy and telecommunications, increased consumer spending and stable policies will play a major role in attracting FIIs in India. The Securities and Exchange Board of India (SEBI) with the Institute of Chartered Accountants of India (ICAI) jointly monitor the markets and announced measures regulations allowing Indian companies more transparent and more disciplined. According to the April 2005 report on corporate governance by CLSA Emerging Markets, India ranks fourth with a score of 55. 6 per cent. Banaji (2000) stressed that reforms of the capital market, such as improved market transparency, automation, paperless and regulations on reporting and disclosure standards have been incurred due to the presence of the FIIs. But FII flows may be regarded as cause and effect of reforms on the capital market. The market reforms were initiated because of the presence of FIIs and this in turn lead to increased flows. The Government of India has granted preferential treatment to FIIs through 1999-2000 by subjecting their earnings to long-term capital to a lower tax rate of 10 per cent while domestic investors had to pay more – term capital gains tax. The Indo-Mauritius agreement for the avoidance of double taxation in 2000 (DVLA), exempts Mauritius-based entities to pay capital gains in India – including the tax on income from the sale of shares. This provides an incentive for foreign investors to invest in Indian markets hit the road in Mauritius. Therefore, we now see investments coming from Mauritius while there were none before 2000. The country wise distribution of registered FIIs in India, majority of them from the USA and UK. Chakrabarti (2002) and Rao et al. (1999) emphasize the fact that due to existing inter-relationships, the source of the FII investment might not be the country where the institution operates. Nevertheless, the figure gives an idea of the country wise distribution of FIIs in India. To encourage long-term investments in the Indian market, the 2003 budget proposed that investors who buy shares of listed companies from 1 March 2003 will be exempt from tax on gains they make on their Benefits CONCLUSION REFERENCES