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Strategic Financial Management

Foreign institutional investors and impact of corona virus on there investments from 13 march to 23 march 2020 in India Foreign Institutional Investors (FII) are an investment fund or a gathering of investors. Such a fund is registered in a foreign country, i.e. not in the country it is investing in. Such institutional investors mostly involve hedge funds, mutual funds, pension funds, insurance bonds, high-value Debentures, investment banks etc. We use this term FII for foreign players investing funds in the financial market of india. They play a big role in the development of our economy. The amount of funds they invest is very considerable. So when such FII’s buy shares and securities the market is bullish and trends upwards. The opposite may also happen when they withdraw their funds from the markets. So they have considerable sway over the market. IMPORTANCE OF FII Foreign Institutional Investors (FIIs) have been playing a significant role in the Indian capital market and hence, in the process of capital formation and economic development of the country since the implementation of New Economic Reforms in 1991. India, being a capital scarce country, has taken many measures to make the investment environment encouraging for Foreign Institutional Investment since the beginning of reforms FII role is very important for the development of our country.FII are much more higher in developing economies as compare to mature economies due to potential of higher growth in developing economies FII THROUGH STOCK EXCHANGES Foreign Institutional Investors (FIIs), Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs) are allowed to invest in the primary and secondary capital markets in India through the Portfolio Investment Scheme (PIS). Under this scheme, FIIs/NRIs/PIOs can acquire shares/debentures of Indian companies through any stock exchange in India.  The ceiling for overall investment for FIIs is 24 per cent of the paid up capital of the Indian company and 10 per cent for NRIs/PIOs. The limit is 20 per cent of the paid up capital in the case of public sector banks.  The ceiling of 24 per cent for FII investment can be raised up to sectoral cap/statutory ceiling, subject to the approval of the board and the general body of the company passing a special resolution to that effect. And the ceiling of 10 per cent for NRIs/PIOs can be raised to 24 per cent subject to the approval of the general body of the company passing a resolution to that effect.  The ceiling for FIIs is independent of the ceiling of 10 per cent/24 per cent for NRIs/PIOs.  The equity shares and convertible debentures of the companies within the prescribed ceilings are available for purchase under PIS subject to: o the total purchase of all NRIs/PIOs both, on repatriation and nonrepatriation basis, being within an overall ceiling limit of (a) 24 per cent of the company’s total paid up equity capital and (b) 24 per cent of the total paid up value of each series of convertible debenture; and o the investment made on repatriation basis by any single NRI/PIO in the equity shares and convertible debentures not exceeding five per cent of the paid up equity capital of the company or five per cent of the total paid up value of each series of convertible debentures issued by the company.  IMPACT OF FII TREND OF INVESTMENT IN INDIA IN MARCH DUE TO CORONA VIRUS  FII Rs Crores DII Rs Crores Date Gross Purchase Gross Sales Net Purchase / Sales Gross Purchase Gross Sales Net Purchase / Sales 23-Mar2020 5,701.63 8,690.92 -2,989.29 6,897.22 5,814.98 1,082.24 20-Mar2020 9,550.97 12,896.92 -3,345.95 8,229.44 5,798.20 2,431.24 19-Mar2020 6,766.44 11,389.37 -4,622.93 8,692.51 4,325.08 4,367.43 18-Mar2020 6,853.17 11,938.52 -5,085.35 11,245.21 7,608.77 3,636.44 17-Mar2020 6,655.46 10,700.15 -4,044.69 7,632.05 4,209.93 3,422.12 16-Mar2020 6,908.97 10,718.90 -3,809.93 8,198.16 5,583.62 2,614.54 13-Mar2020 8,336.42 14,364.00 -6,027.58 13,264.47 7396.57 5867.90 From the above table it is concluded that FII are the net sellers in india stock market during last week which has resulted in blood bath in indian stock market they are withdrawing money from india and lead to increase in dollar price which has reached RS76.29 today on 24/03/2020..on the other hand DII(DOMESTIC INSTITUTIONAL INVESTORS) are net buyers as they are finding value in Indian stocks..

MR .ANUJ NANDA

FACULTY MBA TECNIA INSTITUTE OF ADVANCE STUDIES

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