Determinants of Foreign Institutional Investors’ Investment in India


  • Manjinder KAUR G.G.S Khalsa College
  • Sharanjit S. DHILLON Guru Nanak Dev University


Sensex, S&P 500 Index, Short-run Dynamics, Long-run Equilibrium


The present study aims at exploring the determinants of Foreign Institutional Investors’ (FIIs) investment in India. Returns on Indian stock market have positive impact whereas US stock market returns have no significant influence on FIIs investment to India. Stock market risk has negative influence on FIIs inflows to India. Market capitalization and stock market turnover of India have significant positive influence only in short-run. Among macroeconomic determinants, economic growth of India has positive impact on FIIs investment both in long-run and shortrun. But all other macroeconomic factors have significant influence only in long-run like inflation in US has positive influence whereas inflation in India has negative influence on FIIs investment. Further, US interest rate has adverse impact on FIIs investment while liberalization policies of India exhibited significant contribution to FIIs inflows. Study concludes that FIIs inflows in India are determined by both stock market characteristics and macroeconomic factors.



How to Cite

KAUR, M., & DHILLON, S. S. (2010). Determinants of Foreign Institutional Investors’ Investment in India. Eurasian Journal of Business and Economics, 3(6), 57-70. Retrieved from