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Foreign Portfolio Investments and Return Volatility: An Analysis of the Indian Stock Market


Affiliations
1 Maharishi Markandeshwar University, Mullana, Ambala, Haryana, India
     

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Foreign investments are the investments made by residents of a country in the financial instruments and production process of any other country. Any individual, entity or institution that invests money in the financial markets of other countries is called as Foreign Portfolio Investor. Policymakers of any country are concerned about foreign equity investors because they can withdraw their capital from a country rapidly and hence affect the stability of stock markets in the country. The present paper carries the objective of examining the influence of foreign portfolio investor trading behaviour on the stock markets of India. Various models of GARCH have been used to examine the impact and coefficients were found to be significant in all the cases. Hence the paper suggests the government and economists should design and control suitable foreign investments policies for the Indian Stock markets.

Keywords

Conditional Volatility Models, Portfolio Investments, Volatility.
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  • Foreign Portfolio Investments and Return Volatility: An Analysis of the Indian Stock Market

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Authors

Ruchika Wadhwa
Maharishi Markandeshwar University, Mullana, Ambala, Haryana, India

Abstract


Foreign investments are the investments made by residents of a country in the financial instruments and production process of any other country. Any individual, entity or institution that invests money in the financial markets of other countries is called as Foreign Portfolio Investor. Policymakers of any country are concerned about foreign equity investors because they can withdraw their capital from a country rapidly and hence affect the stability of stock markets in the country. The present paper carries the objective of examining the influence of foreign portfolio investor trading behaviour on the stock markets of India. Various models of GARCH have been used to examine the impact and coefficients were found to be significant in all the cases. Hence the paper suggests the government and economists should design and control suitable foreign investments policies for the Indian Stock markets.

Keywords


Conditional Volatility Models, Portfolio Investments, Volatility.