A PROJECT REPORT ON ROLE OF FINANCIAL INSTITUTION IN CAPITAL MARKET IN INDIA

SUBMITTED BY NEHA BHADRA

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQURIEMENT FOR POST GRADUATE DIPLOMA IN FINANCIAL SERVICES (PGDFS) OF UNIVERSITY OF PUNE

UNDER THE GUIDANCE OF Ms. RACHANA PHADKE

SINHGAD BUSINESS SCHOOL, PUNE CITY SESSION- 2009-10

BONAFIED CERTIFICATE

This is to certify that Mr. ROHAN MESHRAM Studying in the second semester of Post Graduate Diploma in Financial services of University of Pune is a Bonafide student of Sinhgad Business School, Pune City.

Director

Sinhgad Business School

Pune City

DECLARATION

I, the undersigned, hereby declare that the Project Report entitled ROLE OF FINANCIAL INSTITUTION IN CAPITAL MARKET IN INDIA written and submitted by me to the University of Pune, in partial fulfillment of the requirements for the award of degree of Post Graduate Diploma In Financial Services under the guidance of Ms. RachanaPhadke is my original work and does not form earlier the basis for the award of any degree or similar title of this or any other University or examining body. In addition, the conclusions drawn therein are based on the material collected by myself.

Place: Pune

RohanJ.Meshram

Date:

Research Student

APPROVAL CERTIFICATE

The project report of

Mr. ROHAN MESHRAM

ROLE OF FINANCIAL INSTITUTION IN CAPITAL MARKET IN INDIA is approved and is acceptable in quality and form.

Internal Examiner

External Examiner

Signature:

Signature:

Name:

Name:

GUIDES CERTIFICATE
This is to certify that the Project Report entitled ROLE OF FINANCIAL INSTITUTION IN CAPITAL MARKET IN INDIA which is being submitted herewith for the award of the degree of Post Graduate Diploma In Financial Services of University of Pune, is the result of the original research work completed by Mr. ROHAN MESHRAM under my supervision and guidance and to the best of my knowledge and belief the work embodied in this Project Report has not formed earlier the basis for the award of any degree or similar title of this or any other University or examining body.

CERTIFIED

Ms. RachanaPhadke Guides Name & Signature

TABLE OF CONTENTS
CONTENTS ABSTRACT 1.INTRODUCTION 2.OBJECTIVE 3.METHODOLOGY 4.INSTITUTIONALINVESTORS 5.TYPES OF INSTITUTIONALINVESTOR 5.1DOMESTICINSTITUTIONALINVESTORS 5.1.1DOMESTICFINANACIALINSTITUTION 5.1.2INSURANCECOMPANIES 5.1.3BANKS 5.1.4ASSETMANAGEMENT COMPANY 5.2FOREIGN INSTITUTIONALINVESTORS 5.2.1SOURCESOF FII IN INDIA 6.CAPITALMARKETIN INDIA 7.INSTITUTIONALINVESTORS REGISTEREDIN INDIA 7.1MUTUALFUND REGISTEREDIN INDIA 7.2FII REGISTEREDIN INDIA 8.MAJOR INSTITUTIONALINVESTORS IN INDIA 8.1DOMESTICINSTITUTIONALINVESTORS 8.1.1 LIFEINSURANCE CORPORATION 20 21 22 23 23 16 17 18 20

P PAGE NO SDASD
8 11 13 13 14 14 14 14 15 15 15

8.1.2RELIANCEMUTUALFUND 8.1.3ICICI PRUDENTIAL 8.1.4UTI MUTUALFUND 8.1.5HDFC MUTUALFUND 8.2FII 8.2.1DEUTSCHEGROUP 8.2.2CITIGROUPGROUP 8.2.3HSBC GLOBALINVESTMENT 8.2.4MORGAN STANLEY&CO INTERNATIONALLTD 8.2.5DSPMERRILLLYNCH 9.INVESTMENTTRENDS OF INSTITUTIONALINVESTORS IN INDIA 9.1INVESTMENTTRENDS OF INDIAN MUTUALFUND INDUSTRY 9.2FOREIGN INSTITUTIONALINVESTMENT 9.2.1REASONS FOR GROWTHIN FII INVESTMENT 10. FII: COST BENEFIT ANALYSIS 11. DETERMINATION OF FII 12. COMPARISION BETWEEN FIIS & MUTUAL FUND INVESTMENT 13. ROLE OF INSTITUTIONAL INVESTORS IN CAPITAL MARKET 14. A STUDY OF MAJOR EPISODES OF VOLATILITY 15. STATISTICAL ANALYSIS RECOMMENDATION CONCLUSION REFERENCES ANEXURE

24 24 25 25 26 26 27 27 27 28 28 28 29 30 31 34 36 36 40 45 50 51 52 53

ABSTRACT: "Thewholeis much more than justthe sumof the parts"Aristotle Aneconomy,apartfromeverythingelse,isahighlyfluidtransmissionmechanism.Itsbeautylies inhowthe smallestofchangeshavethemostcomplextrickle-downeffects.Aparadigmatic by

exampleofhowseeminglyminorpolicychangescanjumpstarttheeconomycanbeillustrated examiningthe effects liberalization on capital market in India.

Globalization had led to widespread liberalization and implementation of financial market reformsinmanycountries,mainlyfocusingonintegratingthefinancialmarketswiththeglobal markets.IndianCapitalMarkethasalsoundergonemetamorphicreformsinthepastfewyears. Every

segment of Indian Capital Market vizprimary and secondary markets, derivatives, institutional investment and market intermediation has experienced impact of these changes

whichhassignificantlyimprovedthetransparency,efficiencyand integration ofIndianmarket withthe global markets.

Thisisoneoftheprimereasonswhytheforeignportfolioinvestmentshavebeenincreasingly flowingintotheIndianmarkets.AsignificantpartoftheseportfolioflowstoIndiacomesinthe formofForeignInstitutional Investors(FIIs)investments,mostlyinequities.Eversincethe openingof the Indian equitymarkets to foreigners,FII netinvestments havesteadilygrown.Thus, we cansee that there has been a consistent rise inthe FII inflows intothe country. WhiletheconcernssuchasFIIpullingbacktheirinvestmentsandthekindofdestabilizingeffect onthecapitalmarketinIndiaareallwell-placed,comparativelylessattentionhavebeenpaidso fartoanalyzingtheFIIflowsdataandunderstandingtheirkeyfeatures.Aproperunderstanding ofthenatureanddeterminantsoftheseflows,however,isessentialforameaningfuldebateabout theireffectsaswellaspredictingtheirchancesoftheirsuddenreversals.Thusthisprojectaimsat studyingtheroleofthese InstitutionalinvestorsanditsimpactonthecapitalmarketsinIndia .Thisalsoaimstofindoutthevariousfactorsanddeterminantsfortheirinvestmentsandalsocite outscenarioswhereintheseinvestmentswhenpulledbackbytheseFIIcouldreallyeffectthe markets in India. capital

Institutionalinvestorsareapermanentfeatureofthefinanciallandscape,andtheirgrowthwill

continue

at a similar and perhaps fasterpace.The factorsthatunderpin their development are far fromtransitoryandinmany caseshaveonlyjuststartedhavinganimpact.Thebehavioral

characteristicsofinstitutionalinvestors,therefore,willbeanincreasinglyimportantdeterminant ofdomesticandinternationalfinancialmarketconditions,andthe marketstability warrantserious consideration" Bankfor InternationalSettlements,AnnualReport1998, p95. implicationsforfinancial

EXECUTIVE SUMMARY:

Theobjectiveoftheprojectistofindthedifferentroleofinstitutionalinvestorsinthecapital marketinindiaandthentofindtheroleofinstittutionalinvestorsin themajorvolatileepisodein

thecapitalmarketinindia.FinalytofindtherelationshipbetweentheSensexvariationwiththe variationoftheinvestmentsmadebytheinstitutionalinvestors.Indiaopeneditsstockmarketsto Investor s foreign

investors in September 1992 and has, since 1993, received considerable amount of portfolio investment from foreigners in the form of Foreign Institutional (FII) recipient

investmentinequities.Whileitisgenerallyheldthatportfolioflowsbenefittheeconomiesof countries,policymakersworldwidehavebeenmorethanalittleuneasyaboutsuch investments.Portfolioflows-oftenreferredashotmoney-arenotoriouslyvolatilecomparedto

othertypesofcapitalinflows.Investors areknowntopullbackportfolioinvestmentsatthe slightest hint of trouble in the host countryoften leading to disastrous consequences to its

economy.Theyhavebeenblamedforexacerbatingsmalleconomicproblems makinglargeandconcertedwithdrawalsatthefirst signof

inacountryby

economicweakness.Themethodology between the

usedtoisregressionanalysis.Thedegreeofassociationhelpsustoquantifytherelationship

variation in sensexdue to the variation in the net investments made by the institutionalinvestors. AftercompleteingtheprojectIcould recommendthatGovernmentshouldcertainlyencourage should

foreigninstitutionalinvestmentbutshouldkeepacheckonthevolatilityfactor.Longtermfunds begiven priorityand encouraged someof the actions that couldbe taken to ensure stability are Strengtheningdomestic institutional investors Operational flexibilityto impartstabilityto the market Knowledgeactivitiesand researchprograms ToconcludewithIwouldsaythethattheforeignfundsiscertainlyoneofthemostimportant causeofvolatilityintheIndianstockmarketandhashadaconsiderableinfluenceonit.Although itwouldnotbefairenoughtocometoanyconclusionastherearealotofotherfactorsbeyond thescopeofthestudythateffect

returnsandrisks.itisnoteasytopredictthenatureofthe

macroeconomicfactorsandtheirbehaviorbutithasagreatsignificanceonanyeconomyandits elements.Althoughgenerallyapositiverelationhasbeenseenbetweenthestockmarketreturns FII inflows itis not easyto saywhichis the cause n whichis the effect. 1. INTRODUCTION:
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andthe

Financialmarketsarethecatalystsandenginesofgrowthforanynation.Indiasfinancialmarket beganitstransformationpathintheearly 1990s.Thebankingsectorwitnessedsweepingchanges,

includingtheeliminationofinterestratecontrols,reductionsinreserveandliquidityrequirements andan overhaul in prioritysectorlending. Persistent efforts bytheReserveBank of India(RBI) to putinplaceeffectivesupervisionandprudentialnormssincethenhaveliftedthecountry globalstandards.Aroundthesametime,Indiascapitalmarketsalsobegan closerto tostageextensive

changes.TheSecuritiesandExchangeBoardofIndia(SEBI)wasestablishedin1992witha mandatetoprotectinvestorsandusherimprovementsintothemicrostructureofcapitalmarkets, while the repeal of the Controller of Capital Issues (CCI) in the same year removed the administrativecontrolsoverthepricingofnewequityissues.Indiasfinancialmarketsalsobegan to

embracetechnology. Competition in the markets increased with the establishment of the National Stock Exchange (NSE) in 1994, leading to a significant rise in the volume of transactionsandto the emergence of new important instruments infinancial intermediation.

Indianinvestorshavebeenabletoinvestthroughmutualfundssince1964,whenUTIwas established.IndianmutualfundshavebeenorganizedthroughtheIndianTrustActs,underwhich theyhave enjoyed certain tax benefits. Between 1987 and 1992, public sectorbanks andinsurance companiessetupmutualfunds.Since1993, privatesectormutualfundshavebeenallowed, new Fund)

whichbroughtcompetitiontothemutualfundindustry.Thishasresultedintheintroductionof productsand improvement of services. The notificationof the SEBI (Mutual Regulationsof1993broughtaboutarestructuringofthemutualfundindustry.Anarmslength relationshipisrequiredbetweenthefundsponsor,trustees,custodian,andassetManagement

Company.

This is in contrast to the previous practice where all three functions, namely trusteeship, custodianship, and asset management, were often performedbyone body, Usually the fund sponsor or its subsidiary. The regulations prescribed disclosure and

advertisementnormsformutualfunds,and,forthefirsttime,permittedtheentryofprivatesector mutualfunds.FIIsregisteredwithSEBImayinvestindomesticmutualfunds,whetherlistedor unlisted.The1993Regulationshavebeen revisedonthebasisoftherecommendationsofthe

MutualFunds2000ReportpreparedbySEBI.Therevisedregulationsstronglyemphasizethe
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governanceof

mutualfundsandincreasetheresponsibilityofthetrusteesinoverseeingthe of

functionsoftheassetmanagementcompany.Mutualfundsarenowrequiredtoobtaintheconsent

investorsfor an ychange in the fundamental attributesof a scheme, on thebasis of whichunit holders haveinvested. The revisedregulations require disclosures in terms of portfolio affiliatesofsponsors, of

composition,transactionsbyschemesofmutualfundswithsponsorsor

withtheassetManagementCompanyandtrustees,andalsowithrespecttopersonaltransactions keypersonnel of asset management companiesandof trustees.

IndiaopeneditsstockmarketstoforeigninvestorsinSeptember1992andhas,since1993, considerableamountofportfolioinvestmentfromforeignersintheformofForeign InstitutionalInvestor s(FII)investmentinequities.Thishasbecomeoneofthemainchannelsof portfolioinvestmentinIndiaforforeigners.In

received

ordertotradeinIndianequitymarkets,foreign

corporations need to register with the SEBI as Foreign Institutional Investor (FII). SEBIs definition of FIIs presently includes foreign pension funds, mutual funds, charitable/endowment/universityfundsetc.aswellasassetmanagement moneymanagersoperating on their behalf ThesourcesoftheseFIIflowsarevaried.TheFIIsregisteredwithSEBIcomefromasmanyas 28countries(includingmoneymanagementcompaniesoperatinginIndiaonbehalfofforeign investors).USbasedinstitutionsaccountedforslightlyover41%thosefromtheU.Kconstitute about20% with otherWesternEuropean countrieshosting another 17% of the FIIs. Portfolioinvestmentflowsfromindustrialcountrieshavebecomeincreasinglyimportantfor developingcountriesinrecentyears.TheIndiansituationhasbeennodifferent.Asignificantpart oftheseportfolioflowstoIndiacomesintheformofFIIsinvestments,mostlyinequities.Ever sincetheopeningoftheIndianequitymarketstoforeigners,FIIinvestmentshavesteadilygrown fromabout Rs.2600 crores in 1993 toover Rs.272165 crores till the end of Feb 2008. Whileitisgenerallyheldthatportfolioflowsbenefittheeconomiesofrecipientcountries,policy makersworldwidehavebeenmorethanalittleuneasyaboutsuchinvestments.Portfolioflowsoftenreferredashotmoney-arenotoriouslyvolatilecomparedtoothertypesofcapitalinflows. Investorsareknowntopullbackportfolioinvestmentsattheslightesthintoftroubleinthehost countryoftenleadingtodisastrousconsequences toitseconomy.Theyhavebeenblamedfor

companiesandother

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exacerbatingsmall economicproblems in acountrybymaking largeand concerted withdrawalsat thefirstsignof economicweakness.Theyhavealsobeenresponsibleforspreadingfinancial crisis

causingcontagion ininternational financial markets. Internationalcapitalflowsandcapitalcontrolshaveemergedasanimportantpolicyissuesinthe Indiancontextaswell.ThedangerofabruptandsuddenoutflowsinherentwithFIIflowsand destabilizing effect on equityand foreignexchange markets have been stressed. ThefinancialmarketinIndiahaveexpandedanddeepenedrapidlyoverthelasttenyears.The Indiancapital marketshavewitnessedadramaticincreaseininstitutionalactivityandmore specifically that of FIIs. This changein market environment has made the market more their

innovativeandcompetitiveenablingtheissuersofsecuritiesandintermediariestogrow.InIndia theinstitutionalizationofthecapitalmarketshasincreasedwith FIIsbecomingthedominant

ownerofthefreefloatofmostbluechipIndianstocks.Institutionsoftentradelargeblocksof sharesandinstitutionalorder scanhaveamajorimpactonmarketvolatility.Insmallermarkets, institutionaltradescanpotentiallydestabilizethemarkets.Moreover,institutionsalsohaveto theirtradingstrategiescarefullysothattheirtradeshavemaximumpossible minimumpossibleimpact costs. designandtime returnsand

2. OBJECTIVEOFTHE PROJECT:
ToStudytheImpactofInstitutionalInvestorsespeciallytheFIIonthecapitalmarketin India. Tostudy themajorEpisodesofvolatilityinIndiaandanalyzingtheimpactofInstitutional investorsin theseepisodes. ToquantifytherelationbetweenFIIflowsandtheirrelationshipwitheconomicvariables, particularlywithNIFTY. 3. METHODOLOGY: ForcoveringtheTheoreticalpartIshallbegoingthroughalotofliteratureincludingbookson FII&CapitalMarket.BeyondthisIshallbetrackingtheperformanceofFIIthroughthehelpof internet. ToStudythemajorepisodesofvolatilityinIndia,Iwouldbereadingthroughalotofliterature, magazinesandvisiting various sitesfor their comments during that period. articles, and

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Forthestudypurpose,IwilltakeonlyNIFTYthatistheNationalStockExchange(NSE) benchmarkIndexisconsidered.ThisisbecausethelargerchunkofFIIactivityinIndiahappens ontheNSE.NSEisthedominantexchangeinIndiawithcloseto75%ofcashmarketturnover andwellover90%ofderivativesturnoverinIndia happeningontheNSE.Thedailyindex

volatilityandvolatilityindailyFIIcashflowswerestudiedanddailyFIIvolatilityontheNifty volatility.OntheinformationsogatheredIwillberunningSPSSanalysis&reachingontothe conclusion. Thusthroughoutthe projectI shall bemaking use of secondarydata. 4. INSTITUTIONALINVESTOR: Aninstitutional investor is an investor,suchas a bank, insurance company,retirementfund, hedge fund,ormutualfundthatisfinanciallysophisticatedandmakeslargeinvestments,oftenheldin verylargeportfoliosofinvestments.Becauseoftheirsophistication,institutionalinvestorsmay oftenparticipateinprivateplacementsofsecurities,inwhichcertainaspectsofthesecuritieslaws inapplicable. maybe

5. TYPESOFINSTITUTIONALINVESTOR 5.1.DOMESTICINSTITUTIONALINVESTOR isusedtodenoteaninvestor-mostlyoftheformofaninstitutionorentity,whichinvests moneyinthe financialmarketsofitsowncountrywheretheinstitutionorentitywas

originallyincorporated. In India, there are broadlyfour types of institutional investors.

5.1.1

DEVELOPMENTALFINANCIALINSTITUTIONSlikeIndustrialFinance

CorporationofIndia(IFCI),IndustrialCreditandInvestmentCorporationof

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India (ICICI), Industrial Development Bank of India (IDBI), the State Financial Corporations, etc.Theroleplayed bythese financialinstitutions(FIs) istoextendfundstothe

companiesforbothlongtermfinancingand(more recently)workingcapitalfinancing.Thefinancialinstitutionsextendbothdebt their nominee directors in the companies. 5.1.2 INSURANCE COMPANIESlike the Life Insurance Corporation (LIC), General InsuranceCorporation (GIC), and their subsidiaries. 5.1.3 BANKS: Earlier banks used to finance only the working capital of the companies. But now theyare also extending long-term finance to the companies. 5.1.4 ASSETMANAGEMENTCOMPANIESallthemutualfundsincludingUnit TrustofIndia(UTI).Themutualfundscollectfundsfrombothindividualsand corporatetoinvestinthe mutualfundsparticipatelargelyinthe financialassetsofothercompanies.InIndia,the equitycapitalofthecompanies.The andequityfinancing to

mutualfundindustrywhichisthemajorinstitutionalinvestorsinIndiastarted in1963withtheformationofUnitTrustofIndia,atthe initiativeofthe Government of India and ReserveBank. ThehistoryofmutualfundsinIndiacanbebroadlydividedintofourdistinct phases FirstPhase:1964-1987,UnitTrustofIndia(UTI)wasestablishedon 1963byanAct of Parliament. SecondPhase:1987-1993,EntryofPublicSectorFunds.1987marked theentryofnon- UTI,public sectormutualfunds set and Life Insurance Corporation of India InsuranceCorporation of India (GIC). ThirdPhase:1993-2003,EntryofPrivateSectorFundsin1993.Kothari (now mergedwithFranklinTempleton)wasthe Pioneer up bypublicsector banks (LIC) and General

firstprivate

sectormutualfundregisteredinJuly1993.AsattheendofJanuary2003; therewere33mutualfundswithtotalassetsofRs.1,21,805crores.The UnitTrustofIndiawithRs.44,541croresofassetsundermanagementwas wayahead

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of othermutual funds. FourthPhase:2003-2007InFeb2003theUnitTrustofIndiaAct1963 UTIwasbifurcatedintotwoseparateentities.TheSpecifiedUndertaking ofUnitTrust ofIndia,functioningunderanadministratorandunderthe rulesframedbyGovernmentofIndia.ThesecondistheUTIMutualFund Ltd,sponsoredbySBI,PNB,BOBandLIC.ItisregisteredwithSEBIand under theMutual Fund Regulations. functions

5.2FOREIGNINSTITUTIONALINVESTOR (FII)

isusedtodenoteaninvestor-mostlyofthe

formofaninstitutionorentity,which

investsmoneyinthefinancialmarketsofacountrydifferentfromtheonewhereinthe institutionorentitywasoriginallyincorporated.FIIinvestmentisfrequentlyreferredto ashotmoneyforthereasonthatitcanleavethecountryatthesamespeedatwhichit comesin. In

countries likeIndia, statutoryagencies likeSEBI have prescribed norms to register FIIs and also to regulate suchinvestments flowing inthrough FIIs. PensionFunds MutualFunds InvestmentTrust Insuranceor reinsurance companies Endowment Funds UniversityFunds Foundationsor CharitableTrusts or Charitable Societies AssetManagement Companies Nominee Companies Institutional Portfolio Managers Trustees

PowerofAttorneyHolders Bank
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5.2.1 SOURCES OFFII IN INDIA: ThesourcesoftheseFIIflowsarevaried.TheFIIsregisteredwithSEBIcome from as many as 28 countries (including money management companies operating in India on behalf of foreign investors). US-based institutions other It is, donot particular national

accountedforslightlyover41%;thosefromtheUKconstituteabout20%with Western European countries hosting another 17% of the FIIs. however,instructivetobearinmindthatthesenational necessarilymeanthattheactualinvestorfundscomefromthese countries.Giventhesignificantfinancialflowsamongtheindustrialcountries, affiliations

affiliations are very rough indicators of the home of the FII investments.In particularinstitutionsoperatingfromLuxembourg,Cayman IslandsorChannelIslands,oreventhosebasedatSingaporeorHongKongare likelytobeinvestingfundslargelyon behalfofresidentsinothercountries.

Nevertheless,theregionalbreakdownoftheFIIsdoesprovideanideaoftherelative importance of different regions of the world in the FII flows.

6. CAPITALMARKETIN INDIA
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TheBombay

StockExchange(BSE),whichbeganformaltradingin1875,isoneoftheoldest

inAsia.Overthelastdecade,therehasbeenarapidchangeintheIndiansecuritiesmarket, bothinprimaryaswellasthe secondarymarket.Advancedtechnologyandonline-based transactions have modernized thestockexchanges.Intermsof thenumberofcompanieslisted andtotal marketcapitalization,

the Indian equity market is consideredlarge countrys stage of relativetothe economic

development.Currently,thereare40mutualfunds,outofwhich33areintheprivatesector and7areinthepublicsector.Mutualfundswereopenedtotheprivatesectorin1992.Earlier, in1987,

banks wereallowed to enter this business, breakingthe monopolyof the UnitTrust of India(UTI),whichmaintainsadominantposition.Before1992,manyfactorsobstructedthe

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expansionofequitytrading.FreshcapitalissueswerecontrolledthroughtheCapitalIssues ControlAct.Tradingpracticeswerenottransparent,andtherewasalargeamountofinsider trading.Recognizingtheimportanceofincreasinginvestorprotection,severalmeasureswere enactedtoimprovethefairnessofthecapitalmarket.TheSecuritiesandExchangeBoardof India(SEBI)wasestablishedin1988.Therehavebeensignificantreforms intheregulationof

thesecuritiesmarketsince1992inconjunctionwithoveralleconomicandfinancialreforms. In1992,theSEBIActwasenactedgivingSEBIstatutorystatusasanapexregulatorybody. Andaseriesofreformswasintroducedtoimproveinvestorprotection,automationofstock trading,integrationofnationalmarkets,andefficiencyofmarketoperations.Indiahasseena tremendous changein the secondarymarket for equity. Amongtheprocessesthathavealreadystartedandaresoontobefullyimplementedare settlementtradeandexchange-tradedderivatives.Before1995,marketsinIndia usedopenoutcry,atradingprocessinwhichtradersshoutedandhandsignaledfromwithina pit.OnemajorpolicyinitiatedbySEBI from1993involvedtheshiftofallexchangesto greatertransparency.Thefirst bookwas screenelectronic

basedtrading,motivatedprimarilybytheneedfor basedonan openelectroniclimitorder

exchangetobe

theNationalStockExchange

(NSE),whichstartedtradingdebtinstrumentsinJune1994andequityinNovember1994.In March1995,BSEshiftedfromopenoutcrytoalimitorderbookmarket.Before1994,Indias stockmarketsweredominatedby BSE.Inotherpartsofthecountry,thefinancialindustry did

nothaveequalaccesstomarketsandwasunabletoparticipateinformingpricescompared withmarketparticipantsinMumbai (Bombay).Asaresult,thepricesinmarketsoutside

MumbaiwereoftendifferentfrompricesinMumbai.Thesepricingerrorslimitedorderflow tothesemarkets.Explicitnationwideconnectivity and implicitmovementtowardonenational

markethaschangedthissituation.NSEhasestablishedsatellitecommunicationswhichgive alltradingmembersofNSEequalaccesstothemarket.Similarly,BSEandtheDelhiStock Exchangearebothexpandingthenumberoftradingterminalslocatedalloverthecountry. Thearbitrages are eliminating pricing discrepancies between markets. TheIndiancapitalmarketstillfaces manychallenges ifit is topromote more efficient allocation and mobilization of capital in the economy.

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First,marketinfrastructurehastobeimprovedasithinderstheefficientflowof informationand effective corporate governance. Second,the trading systemhas tobe mademore transparent. Third,Indiamayneedfurtherintegrationofthenationalcapitalmarketthrough consolidation of stock exchanges. Fourth,the payment system has to be improved to better link the banking and securitiesindustries. Thecapitalmarketcannotthrivealone;ithastobeintegratedwiththeothersegmentsofthe financialsystem.Theglobaltrendisfortheeliminationofthetraditionalwallbetweenbanks and

thesecurities market. Securities market development has to be supported byoverall macroeconomic and financial sector environments. Further liberalization of interest rates, reduced fiscal deficits,fullymarket-based issuanceof Governmentsecuritiesand a more competitivebankingsectorwillhelpinthedevelopmentofasounderand amoreefficient capital market inIndia.

7. INSTITUTIONALINVESTORS REGISTEREDIN INDIA: 7.1MUTUALFUNDS REGISTEREDIN INDIA:

Fromthebarchartaboveitisclearlyevidentthatthemutualfundindustryisstillata
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nascentstageascomparedtotheFIIs.Sinceitsinceptionin1964whenthefirstmutual fundi.e.UTI hadthemonopolyfor25 years.Itwasthus intheyearafter1989 thatpublic sectorbanksandfinancialinstitutionstartedtheirAMC.Finallyinthethirdphasewhen privateplayersenteredthearena,itleadtoafiercebattletoholdthetopslotintheIndian mutualfundindustry.Thegrowingnumberofmutualfundcompaniescorroboratesthe factthatIndianpublicarenowlookingfordifferentavenuestoinvesttheirearningsand areconfidentontheworkingofcapitalmarketinIndia.ThisshowsthatSEBIhasina wayrestoredthefaithoftheseinvestorsinspiteofthedifferentscamsthatrockedthe capital market inIndia. 7.2FII REGISTEREDIN INDIA: Lets lookat some of the data to get an idea about the trendof FIIs in India,and also tosee thefuture direction of their movement. Indiahad528FIIswereregisteredwithSEBIbyendof2001andbyendofFeb-2008the numberincreasedto1303.ThetrendinthenumberofregisteredFIIshasbeenconsistently ontheriseascanbeseenfromthetable;showingthesignificantamountofconfidence Indian Capital market has developed in the last few years. that

Notonlyhasbeenthenumberincreasingonaconsistentbasis,buttheamountofinflow intoIndianmarkethasalsoseenamanifoldincreased.Thegrosspurchase,salesandnet investmentfigureonan annualbasisgivesafairideaabouttheconsistencyoftheir investments inour country.

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Aswecanseeintheinvestmenttrendstable,exceptfor1998,thenetinvestmentbythe FIIsinthe Indianmarkethasalwaysbeenpositivesinceliberalizationwhichtoalarge

extenttellsabouttheconsistencyoftheirpresenceinIndianmarket.Thisisalsoevident fromthefactthatthenumberofFIIregisteringinIndiaisincreasinginspiteofthefact thatSEBIhasdeclinedtoissueany furtherPNnotesandalsoaskedthemtogetregistered.

ThisshowsthatIndiastillremainsthehotspotfortheforeign investorsinthecoming years.

8.MAJOR INSTITUTIONALINVESTORS IN INDIA

Thetotal number of Domestic institutionalinvestors speciallythemutual funds is 40 in number. Similarlyinsurance companies and otherbanks are verylargein number. Butout of thesethere are some heavyweightswhich solelybytheir investments areamong thetop 5 domestic institutional investorsin india.Among thetotal FII registered i.e. 1303 bythe end of feb2008 the top 5 FII interms of their investmentin India are listed below.

8.1.DOMESTICINSTITUTIONALINVESTORS
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8.1.1.LIFEINSURANCE CORPORATION OFINDIA.

LifeInsuranceinitsmodernformcametoIndiafromEnglandintheyear1818. Thefirsttwo decadesofthetwentiethcenturysawlotofgrowthininsurance

business.From44companieswithtotalbusiness-in-forceasRs.22.44crore,itrose to176companieswithtotalbusiness-in-forceasRs.298crorein1938.Duringthe mushroomingofinsurancecompaniesmanyfinancially unsoundconcernswere 19thof

alsofloatedwhichfailedmiserably.However,itwasmuchlateronthe January,1956,thatlifeinsuranceinIndiawasnationalized.About154Indian

insurancecompanies,16non-Indiancompanies and75provident wereoperating in India atthe timeof nationalization. Nationalization wasaccomplished in two

stages;initiallythemanagementofthecompanieswastakenoverbymeansofan Ordinance,andlater,the ownership toobymeansofacomprehensivebill.The

ParliamentofIndiapassedtheLifeInsuranceCorporationActonthe19thofJune 1956,andtheLifeInsuranceCorporationofIndiawascreatedon1stSeptember, 1956,withtheobjectiveofspreadinglifeinsurancemuchmorewidelyandin particularto the ruralareaswithaviewtoreachallinsurablepersonsinthe

country,providingthemadequatefinancial cover at a reasonable cost. LICsemergenceasthebiggestinvestorinthecountryshouldnotsurpriseanyone. The company is 51 years old and enjoyed a state-sanctioned and state-owned

monopolyoverthe earned total

lifeinsurancebusinesstill2000.Thefirmhasissued220

millionpolicies

premiumincomeof Rs39, 541 crorein 2006-07. It is allowed to invest 35% of its funds in equities. ThelargestchunkinLICsportfolioisthestakeitownsinlistedengineeringgiant LarsenandToubroLtd.The15.7%stakeinL&T isvaluedatmorethanRs19,642

crore.Othermajorinvestmentsincludea4.14%stakeinRelianceIndustriesLtd, thelargestIndiancompanyby marketcapitalization,7.2%inICICIBankLtd, 13.4%inITC Ltd and 4.2 % in Reliance Communications Ltd.

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8.1.2 RELIANCE MUTUALFUNDS:

Reliance Mutual Fund (RMF) is one of Indias leading Mutual

Funds,

with

AverageAssetsUnderManagement(AAUM)ofRs.90,938Crores(AAUMfor Mar08)andaninvestorbaseofover66.87Lakhs.RelianceMutualFund,apartof theReliance-AnilDhirubhaiAmbaniGroup,isoneofthefastestgrowingmutual fundsinthecountry.RelianceCapitalLtd. is oneofIndiasleadingandfastest ranksamongthetop3

growingprivatesectorfinancialservicescompanies,and

privatesectorfinancialservicesandbankingcompanies,intermsofnet worth. Reliance Capital Ltd.has interests inassetmanagement, lifeandgeneral insurance, private equityand proprietary investments, stock broking and other financial services.

8.1.3 ICICI PRUDENTIALFUNDS: ICICI PrudentialAsset Management Company enjoysthe strong parentage of prudentialplc,oneofUK'slargestplayersintheinsurance&fundmanagement sectorsand ICICIBank,awell-knownandtrustednameinfinancialservicesin India.ICICIPrudentialAssetManagementCompany,inaspanofjustovereight years,hasforgedapositionofpre-eminenceintheIndianMutualFundindustry asoneofthelargestassetmanagementcompaniesinthecountrywithassetsunder management ofRs. 37,906.24 crore(as of March 31, 2007). The

Companymanagesacomprehensiverangeofschemestomeetthevaryinginvestmentnee ds ofitsinvestorsspreadacross68citiesinthecountry.UponitsinceptioninMay 1998itmanages2fundsofRs160Crandhasgrowntomanage35Fundsworth Rs62,008.95 Cr.

24

8.1.4 UTI MUTUALFUNDS: UTIMutualFundcameintoexistenceon1stFebruary2003.BankofBaroda (BOB),Punjab NationalBank(PNB)andStateBankofIndia(SBI)andLife InsuranceCorporationofIndia (LIC)arethesponsorsoftheUTIMutualFund. UTI Mutual Fund is managed by UTI Asset Management Company Private Limited (AMC). UTIAMCis

aregisteredportfoliomanager under 1993 for

theSEBI (Portfolio Managers) Regulations, portfolio management

undertaking

servicesandalsoactsasthemanagerandmarketertooffshorefunds.UTIMutual Fundhasanationwidenetworkconsisting70UTIFinancialCenters(UFCs)and InternationalofficesinLondon,DubaiandBahrain.Thefundhasatrack recordofmanagingavarietyofschemescateringtotheneedsofeveryclassof citizenry. 8.1.5 HDFC MUTUALFUND: HDFC (Housing Development Finance Corporation Limited) is one of the dominant playersin the Indian mutualfund space. HDFC was incorporated in 1977 as the first specialized MortgageCompany in India. HDFC MutualFunds are handled by HDFC AssetManagementCompanyLimited.HDFCAssetManagementCompany wasincorporatedundertheCompaniesAct,1956,onDecember10,1999,andwas approvedto act as anAsset Management Companyfor theMutual Fund bySEBI on July3, 2000.Thecompanyalso provides portfolio management/ advisoryservices. UTI

8.2FOREIGNINSTITUTIONALINVESTORS: 25

8.2.1 DEUTSCHE GROUP:

DWSInvestmentspartofDeutscheAssetManagement,wasfoundedin1956in Frankfurt/Main.Withfundassetsundermanagementofeuro267bn,thecompany isoneoftheTop10companiesworldwide.InEurope,DWSisoneoftheleading mutualfundcompaniesandcurrently manageseuro173 bn.In excessof morethan euro147bnassetsundermanagement,DWSrepresents22,3%ofthefundmarket inGermany, making it theunchallenged numberone. TheInternationalnatureofitsbusinessdifferentiatesDWSsignificantlyfromits domesticandinternationalcompetitors.DWSInvestmentsactivitiesspanallthe keyEuropeanmarkets.Inthe USA,DWSisrepresentedbyDWSScudderand

managesassetsofeuro86bn.Inspring2006,itlauncheditsfirstfundsaswellas theDWSbrandinSingaporeandIndia,continuingitssuccessfulexpansioninthe

26

Asia-Pacificregion.Thereafter,morefundswereregisteredinothercountriesin Asia-Pacific.

8.2.2 CITIGROUP: TheformationofCitigroupin1998createdanewmodeloffinancialservices organization toserveitsclientsfinancialneeds.Asthecompany continues togrow and evolve, its increasingly evident that such a large, complex grouping of

businessescanindeedsucceed.With275,000employeesworkinginmorethan100

countries

andterritories, Citigroups globalityand diversity contribute to its continued success. 8.2.3 HSBC GLOBALINVESTMENTS: HSBC Investments is one of the world's premier fund management organizations.Ithasestablishedastrongreputationwithinstitutionalinvestors includingcorporations,governments,insurancecompaniesandcharitiestheworld over delivering consistently superior returns. In Indiawe for

offer fund

managementservicesforinstitutional productsincludesEquityFunds Income/DebtFunds.

aswellasretailinvestors.Ourarrayof

8.2.4 MORGANSTANLEY&COINTERNATIONALLTD: Morgan Stanleyis a global financial servicesfirmand a marketleader in securities, investment managementandcreditservices.Ithasmorethan600officesin27 around

countriesandmanages$421billioninassetsforinstitutionalandindividualclients theworld. Stanley Investment

Management (MSIM), the asset

management company of Morgan Stanley was established in 1975. Morgan StanleyenteredIndianmarketin1989withthelaunchofIndiaMagnumFund.In 1994,MorganStanleylaunchedMorganStanleyGrowthFund(MSGF).Itisone thelargestprivate sectorschemesinvesting in equities. of

8.2.5 DSPMERRILLLYNCH :
27

DSP

Merrill Lynch Mutual Funds are managed by DSPMerrill Lynch Fund

Managers. DSP MerrillLynch Ltd. (DSPML) is a premier financial services provider and Merrill Lynch (ML) holds 90% stake in DSPML. DSPMLwas originallycalled DSPFinancialConsultantsLtd.Thefirmtraces itsoriginstoD.S.

Purbhoodas&Co., a securities and brokerage firm with over 140 years of experienceintheIndianmarket.MerrillLynchisoneoftheworld'sleadingwealth management,capitalmarketsandadvisorycompanieswithofficesin37countries andterritories and totalclient assetsof approximately$1.5 trillion. 9. INVESTMENTTRENDS OFINSTITUTIONALINVESTORS: 9.1INVESTMENTTRENDS OFINDIAN MUTUALFUND INDUSTRY: TheAssetsunderManagementofUTIwasRs.4563Crbytheendof1987.Letme abouttheperformanceofmutualfundsinIndiathroughfigures.FromRs. 4563Cr.theAssets under Managementrose toRs. 32977 Cr inMarch 1993 concentrate

Thenetassetvalue(NAV)ofmutualfundsinIndiadeclinedwhenstockpricesstarted fallingintheyear1992.Thosedays,themarketregulationsdidnotallowportfolioshifts intoalternativeinvestments.Therewasrathernochoiceapartfromholdingthecashorto furthercontinue investing in shares. AloneUTIwithjustoneschemein1964nowcompeteswithasmanyas400odd productsand34playersinthemarket.Inspiteofthestiffcompetitionandlosingmarket share,Lastsixyearshavebeenthemostturbulentaswellasexitingonesfortheindustry. Newplayershavecomein,whileothershavedecidedtocloseshopbyeithersellingoff ormergingwithothers. Productinnovationisnowpass withthegameshiftingto

performancedeliveryinfundmanagementaswellasservice.Theindustryisalsohaving aprofoundimpactonfinancialmarkets.WhileUTIhasalwaysbeenadominantplayer

28

ontheboursesaswellasthedebtmarkets,thenewgenerationsofprivatefunds,which havegained substantialmass,arenowflexingtheirmuscles.Fundmanagers,bytheir selectioncriteriaforstockshaveforcedcorporategovernanceontheindustry.Rewarding honestandtransparentmanagementwithhighervaluationshascreatedasystemofriskcreated wherethecorporate sectoris moretransparent then before. Fundscollectionhasbeenincreasinginlast5yearswhichcanbeattributedtothefactof soundeconomicgrowthandtheconfidenceoftheretailinvestorsonthecapitalmarketof India. 9.2FOREIGNINSTITUTIONALINVESTMENT (FII)isoneofthemainchannelsofforeigninvestmentinIndia.Foreigninstitutional investors(FIIs)werepermittedtoinvestinIndiansecuritiesmarketin1993.Sincethen, theirinvestmentsintoIndian FIIs,asaclassofinstitutionalinvestors, emergingmarketeconomies,inrecentyears.TheFIIinthe equitymarkethavegrownbyleapsandbounds.Infact, haveassumedamajorroleinmatureand Indianequitymarketshas byFIIs reward

risensteadilysince2003-04.Thegrosspurchasesofdebtandequitytogether increasedby50.0percenttoRs.5,20,508crorein2006-07fromRs.3,46,978crorein 2005-06.

INVESTMENTSBYFOREIGN INSTITUTIONALINVESTORS

ThegrosssalesbyFIIsalsoroseby60.3percenttoRs.4,89,667crorefromRs.3, 05,512croreduringthesameperiod.However,thenetinvestmentbyFIIsin2006-07

29

declinedby25.6percenttoRs.30,840crorein2006-07fromRs.41,467crorein200506mainlyduetolargenetoutflowsfromtheequitysegment.Butthecumulativenet investmentbyFIIsinIndianstockmarket(since1993)crossedUSD50billionattheend ofMarch2007.AsonMarch31,2007,thecumulativenetinvestmentbyFIIswasUSD 52billion.ThecumulativenetinvestmentbyFIIsatacquisitioncost,whichwasUSD 15.8 billionattheendofMarch2003,hadrisentoUSD45.3billionattheendofMarch 2006.TheFIIinequity,whichwashighinthepreviousyears,declinedin2006-07. 07,FIIsreducedtheirinvestment,inbothequitiesaswellasdebtsecurities. ThenetFIIinvestmentinequityduring2006-07wasRs.25,236crore,atitslowestin pastthreeyears.Thiswas mainlydueto largenet salesinsome months of 2006-07. NETINVESTMENTBYFII During2006-

INVESTMENTTRENDS BYFII

AsfarastheinvestmenttrendsofFIIareconsideredwecanseethatthetrendandthe

actual

investmentgohandinhandexceptin98-99and2003-2004.Thenetinvestment flowsbyFIIswere negativeduring1998-99primarilybecauseoftheuncertaintythat prevailedafterIndiatestedaseriesofnuclearbombsinMay1998andtheimpositionof economicsanctionsbytheUS,Japanandother industrializedcountriesbuttheFIIs

portfolioflowsquicklyrecoveredandhavebecomeapositivenetinvestmentfromthe subsequentyearsonwards.

9.2.1REASONS FOR GROWTH INFII INVESTMENTS Globalliquidityis, of course,the primarycauseof the recent surge inAsianmarkets includingIndia.Alsolowinterestrateregimehasledforeigninvestorstolookfor freshavenuestoinvest.Thishasresultedinmostemergingmarketsseeingheavy inflows. FIIsseeIndiaasagooddestinationtoinvestinandmakemoney.Theyarehappy Indiangovernment'scommitmenttoeconomicreforms.Theyarealso lookingcloselyatsectors(andcompanieswithinthesesectors)which theythink withthe

30

havepotential. factor.

Infact,thegrowingcompetitivenessofIndiancompaniesisan enticing

Long-TermCapitalGainsTax:whichisthetaxaninvestorpayswhenhesellshis sharesafter morethanayear--hasbeenabolished;thusonecansellhisshares

withouthavingto paythegovernmentanykind of tax. Rupee Appreciation: The dollar has been falling in value vis--vis other currencies.Asaresult,FIIsdontfindthethoughtofinvestingintheUSmarketall that attractive.Theyknow theywillmakemore moneyif theyinvestelsewhere. EconomicGrowth:AsmentionedearlierwewitnessedaGDPgrowthrateofabout 8.5%lastyear.OurindustrieslikeTelecom,Bankingetcaredoingrelativelywell. Allthese makeour countryveryattractive to invest in. ThesheersizeofIndiaandtherelativestabilitythecountryoffersareotherobvious pluspoints. Whateverthecasemaybe,aperceptionisgainingmomentumthat

foreigninvestorsarehere to stayat least in the short-term.

10.FOREIGNINSTITUTIONALINVESTMENT:ACOSTBENEFITANALYSIS

Theroleofforeigninvestmentovertheyearscantbeignored.Itcertainlyhashadanimpacton theIndianstockmarketwithalotofbenefitsbutalongwiththesebenefitsthereareafewcosts attachedwithit.ThereforeitisusefultosummarizethebenefitsandcostsforIndiaofhaving foreigninflows.

BENIFITS
a)Reducedcostofequity

FIIinflowsaugmentthesourcesoffundsintheIndiancapitalmarkets.FIIinvestment reducestherequiredrateofreturnforequity,enhancesstockprices,andfostersinvestmentby Indianfirmsinthecountry. TheimpactofFIIsuponthecostofequitycapitalmaybe visualized

byasking what stock prices would be iftherewereno FIIs operating in India.

31

b) Stabilityin the balanceofpayment ForpromotinggrowthinadevelopingcountrysuchasIndia,thereisneedtoaugment domesticinvestment,overandbeyonddomesticsaving,throughcapitalflows.Theexcessof domesticinvestmentoverdomesticsavingsresultinacurrentaccountdeficitandthisdeficit isfinancedbycapitalflowsinthebalanceofpayments.Priorto1991,debtflowsandofficial developmentassistancedominatedthesecapitalflows.Thismechanismoffundingthecurrent accountdeficitiswidelybelievedtohaveplayedaroleintheemergence paymentsdifficultiesin1981and1991.Portfolioflowsintheequitymarkets,andFDI,as opposedtodebt-creatingflows,areimportantassaferandmoresustainablemechanismsfor fundingthe current account deficit. ofbalanceof

c) Knowledgeflows TheactivitiesofinternationalinstitutionalinvestorshelpstrengthenIndianfinance.FIIs advocatemodernideasinmarketdesign,promoteinnovation,developmentofsophisticated productssuchasfinancialderivatives,enhancecompetitioninfinancialintermediation,and lead to spillovers of human capital by exposing Indian participants to modern financial

techniques,andinternational best practices and systems.

d) Strengtheningcorporategovernance Domesticinstitutionalandindividualinvestors,usedastheyaretotheongoingpracticesof Indiancorporate, internationalbenchmarksof oftenacceptsuchpractices,evenwhenthesedonotmeasureuptothe best practices. FIIs,withtheirvastexperience withmodern

corporategovernancepractices,arelesstolerantof

malpracticebycorporatemanagersand marketsoftenleadto

owners(dominantshareholder).FIIparticipationindomesticcapital

vigorousadvocacyofsoundcorporategovernancepractices,improvedefficiencyandbetter shareholder value.

32

e) Improving market efficiency AsignificantpresenceofFIIsinIndiacanimprovemarketefficiencythroughtwochannels. First,whenadversemacroeconomicnews,suchasabadmonsoon,unsettlesmanydomestic investors, it may be easier for a globally diversified portfolio manager to be more dispassionateaboutIndia'sprospects,andengageinstabilizingtrades.Second,atthelevelof individualstocksandindustries,FIIsmayactasachannel throughwhichknowledgeand into India.For

ideasaboutvaluationofafirmoranindustrycanmorerapidlypropagate

example,foreigninvestorswererapidlyabletoassessthepotentialoffirmslikeInfosys, whichareprimarilyexport-oriented,applyingvaluationprinciplesthatprevailedoutsideIndia for softwareservices companies.

COSTS

a)Hedgingand
positivefeedbacktraining There areconcernsthat foreign investors are chronicallyill informedabout india, andthis lack generateherding(alargenumberofFIIsbuyingorsellingtogether) ofsoundinformationmay andpositivefeedback of behaviorcan

(buyingafterpositivereturns,sellingafternegativereturns).These Kinds exacerbate volatility,andpush prices awayfrom fairvalues.

b) Balanceof vulnerability

payment

Thereareconcernsthatinanextremeevent,therecanbeamassiveflightofforeigncapital outofIndia,triggeringdifficultiesinthebalanceofpaymentsfront.India'sexperiencewith FIIssofar,however,suggeststhatacrossepisodeslikethePokhranblasts,orthe2001stock marketscandal,nocapitalflighthastakenplace.AbillionormoreofUSdollarsofportfolio capitalhasneverleftIndiawithintheperiodofonemonth. WhenjuxtaposedwithIndia's

enormous current account and capital account flows, this suggests that there is little vulnerabilityso far.

c)Possibility
33

oftakeovers WhileFIIsarenormallyseenaspureportfolioinvestors,withoutinterestincontrol,portfolio investorscanoccasionallybehavelikeFDIinvestors,andseekcontrolofcompaniesthatthey haveasubstantialshareholdingin.Suchoutcomes,however,maynotbeinconsistentwith India's questfor greater FDI. Furthermore, SEBI'stakeover code is in place, and has functioned fairlywell,ensuring that all investorsbenefit equallyin the eventof a takeover.

11.DETERMINANTS OFFOREIGN INSTITUTIONALINVESTMENT After theinitiationofeconomicreformsintheearly1990s,themovementofforeigncapitalflow substantially.Therearealotoffactorsthatdeterminethenatureandcauseof

increasedvery

foreigninstitutionalinvestmentinacountryafewofthembeinginflationexchangerateequity returns,governmentpolicies,priceearringratioandrisk.Nowifwetrytoanalyzetherelationof eachofthesefactorswiththelevelofforeigninflowinthecountry, wemighthaveabetter

understanding.letusbroadlyclassifythefactorsintoinflation,riskandstockmarketreturnsand understandthe basic principle behind theinflows.

a)

Equityreturns-Anincreaseinthereturnintheforeignmarketwillinduceinvestorsto withdrawfromtheIndian(domestic)stockmarkettoinvestintheforeignmarket.Investors arebelieved tofollowahigherreturn,hence when thereturnin thedomestic marketincreases, FIIflowstothedomesticmarket.Whiletheflowsarehighlycorrelatedwithequityreturnsin India,theyaremorelikelytobetheeffectthanthecauseofthesereturns..Itisassumedthat theequityreturnshaveapositiveimpactontheFIIinflowbutforeigninvestorscanalsoget involvedinprofitbooking.Theycanbuyfinancialassetswhenthepricesaredeclining, therebyjacking-uptheassetpricesandsellwhentheassetpricesareincreasingandhencebe thecauseof such returns so making it more of abi-directional relationship.

b)

Risk-Investorsareconsideredtoberiskaverse,hencewhenriskinthedomesticmarket increasestheywill withdrawfromthedomesticmarket,whenriskintheforeignmarket

increases,investorswillwithdrawfromtheforeignmarketandinvestintheIndian(domestic) market.Investments,eitherdomesticorforeign,dependheavilyonriskfactors.Hence,while
34

studyingthebehaviorofFII,itisimportanttoconsidertheriskvariable.Riskcanbedivided intoex-anteandunexpectedrisk.Whiletheex-anteriskcertainlyhasaninverserelationwith theforeign investmentnothingcan be clearlysaid aboutthe unexpectedrisk.

c)

Inflation-

Theinflationnodoubthasaninverserelationwiththeforeigninvestmentinflowas

theinvestorwouldkeepinmindthepurchasingpowerofthefundsinvestedandasinflation increasei.e.thepurchasingpowerdeclinestheinvestorismostlikelytowithdrawhismoney. Wheninflationinthedomesticcountryincreases,thepurchasingpowerofthefundsinvested declines,hence investorswill withdrawfromthe domestic market.Similarly,when inflation in theforeigncountryincreases,thepurchasingpoweroffundsinvestedintheforeigncountry declines, causing institutional investors to withdraw from the foreign market and make investmentin the domestic (Indian) market. ExchangerateWhenthevalueofthehomecurrencyisstrongertheFIIinvestmentswill alsoincrease as the percentage of returns the FII getautomaticallyincreasesandvisa versa

d)

Soitcanbesaidthattheinflationandriskinthedomesticcountryandreturnintheforeign countryadverselyaffecttheFIIflowingtothedomesticcountry,whereasinflationandriskinthe foreigncountryandreturn inthe domestic countryhave afavorable effect on the flow of FII.

12.COMPARISON BETWEEN FIISAND MUTUALFUNDS INVESTMENTS ThecomparisonbetweentheFIIpurchasesandnetinvestmentwithMutualfundsfortheperiod reveals some interesting information.As canbe seen from thefigure, Theamountofmutualfundinvestmentinourcountryisverymeagerascomparedtothat of FIIs. It meansthatIndian public is still not putting itsbet on mutual funds and.
35

FIIsaremuchmoreaggressiveinnaturethanmutualfunds,whoseemtohave beenvery constant in there approach to the Indianequitymarket. SinceMay04,whenthestockmarketcrashedby800pointsinaday,themarkethas recoveredsmartlyandtheFIIshavebeenabletocashontothegainsbybuyingValue stocksduringtheleanperiods,orbuyingonthedips. Whilethemutualfundshaveseems

totakenadifferentroutealtogetherandhavebeennetsellersformostoftheperiodsince May04. Butaftertheyear2004mutualFundinvestment havealsoatremendousincrease.There has

activityistheproofoftheconditionthathasprevailedinthecapitalmarketrecentlythat created a lot of faith amongtheretail investorsalso. Alsointheyear2007hassofarbeenthebestyearformutualfundindustryasithas shownatremendousgrowthintermsofnetinvestment.Thiscorroboratesthefactthatnow

Indianpublichasstarted recognizingmutualfundastoolforinvestinginthecapital market in india. 13.ROLEOFINSTITUTIONALINVESTORS IN CAPITALMARKETIN INDIA: AstheIndiancapitalmarketopeneditsgatesfortheforeigninstitutionalinvestors.with therehasbeen an time

increasingtrendsofthereparticipatinginthecapitalmarket.Withthere effectonmany parametesoftheindiaNcapital

increasingparticipationtherehasbeenalotof

market.Themajoreffectoftheincreasingparticipationoftheinstitutionalinvestorshasbeen observed inthe following areas. Liquidity:Marketliquidityisabusiness,economicsorinvestmenttermthatreferstoan asset'sabilitytobeeasilyconvertedthroughanactofbuyingorsellingwithoutcausinga significantmovementinthepriceandwithminimumlossofvalue.Anactofexchangeof alessliquidassetwithamoreliquidassetiscalledliquidation.Liquidityalsorefersboth tothatqualityofabusinesswhichenablesittomeetitspaymentobligations,intermsof possessingsufficientliquid assets;and to such assetsthemselves. Aliquid asset has someor more of thefollowingfeatures.Itcan be sold (1) rapidly,(2) withminimalloss of value, (3) anytimewithin market hours.The essential characteristic of aliquid marketis that thereare readyandwilling buyersand sellersat all times.An
36

elegant definition of liquidityis also theprobabilitythat the next trade is executed at a price equal to the lastone.Amarket maybe considered deeplyliquid if there are ready andwilling buyers andsellersinlarge quantities.This is related toa marketdepth,where sometimes orders cannot stronglyinfluenceprices.The liquidityof a product can be measured as how often itis bought and sold;this is known as volume.Ofteninvestmentsinliquid markets such as thestock exchange orfuturesmarkets areconsidered to be more liquid than investments such as real estate, based on their abilitytobe converted quickly. Someassets withliquid secondarymarkets maybe more advantageoustoown, arewilling topaya higher price for the assetthan for comparableassets without a liquid secondary market.

Pricebuildingmechanism:Withtheincreasingparticipationoftheinstitutionalinvestors inthecapitalmarket,ithasalsohelpedthedifferentcompaniestoraisefundsforthereuse throughthecapitalmarketin india.earlierthecompaniesusetogofordebtfinancing

whichhasacostattachdtoitandalsointhosedaysthecostofissuinganIPOwashigher ascomparedtothefundsthatwerebeinggeneratedbythecompanies.WiththehelpofFII has become morecompetitive. fairvalueof their. Roleofspeculation:Generallypeopletransactforthreereasonshedgingspeculatingand arbitragingHedgersarethosetointendtohedgetheirrisk.Speculationmaybedefinedas thepurchaseorsaleofagoodwithaviewtoresaleorrepurchaseata laterdate, wherethe motivebehind such action is the expectation of changesinthe prices. Speculationisoneofthemostwatchedactivityinany capitalmarketitsimportancevaries indifferent countriesincountrieslikeinUSitformsanintegralpartofthemarket whereasindeveloping themarket

countrieslikeIndiaitstakenasathreat.Itisoftenbelievethat speculators even out the price fluctuation by due to change in demand and supply condition but the concerns about the adverse effects of speculation come from two

sources.First,thepossibilitythatspeculation,insteadofevening outpricefluctuations, may end up exacerbating such fluctuations. Second, is the problem of speculation destabilizing rather than stabilizing prices and hence affecting resource allocation.
37

Throughspeculation,futureexpectedpricenotonly price.

dependson,butalsohasanimpacton

thespot

Themarketforsharesissubjecttomuchlargerfluctuationsthanthemarketforbondsor evencommodities.Sharesrepresentashareintheexpectedfutureprofitsofacompany. Whenfortunesofcompaniesbothintheshortrunaswellasinthemediumtolongrun fluctuate,sodoshareprices.Uncertaintyregardingthefutureleadstoheavydiscounting offutureprofits,andtofocusonshort-periodexpectationsaboutcapitalvalueratherthan long-period prospectsof the company.

The effect of foreign speculative activity in emerging markets can be particularly beneficial if in the emerging market, liquidity is poor First, the potential of market

manipulationisacuteinsmall therearemanypolicyinitiativesthatcould

emergingmarketsandliquidityisoftenpoor.Although increaseliquidityandreducethedegreeof

collusionamonglargetraders,theremaynotbeasufficientmassofdomesticspeculators to ensure market liquidity and efficiency. Second, openingthe market to foreign

speculatorsmayincreasethevaluationoflocalcompanies,therebyreducingthecostof equitycapital.

Volatilty:

Volatilitymostfrequentlyreferstothestandarddeviationofthechangein

valueofafinancialinstrumentwithaspecifictimehorizon.Itisoftenusedtoquantifythe riskoftheinstrumentoverthattimeperiod.Volatilityistypicallyexpressedinannualized terms,anditmayeitherbeanabsolute number($5)orafractionofthemean(5%).

Volatilityisoftenviewedasanegativeinthatitrepresentsuncertaintyandrisk.However, volatilitycanbegoodinthatifoneshortsonthepeaks,andbuysonthelowsonecan makemoney,withgreater moneycomingwithgreater volatility.Thepossibilityformoney

tobemadeviavolatilemarketsishowshorttermmarketplayerslikedaytradershopeto makemoney,and isincontrasttothelongterminvestmentviewofbuyandhold.In

today'smarkets,itisalsopossibletotradevolatilitydirectly,throughtheuseofderivative securitiessuchasoptionsandvarianceswaps.Foreigninstitutionalinvestmentiscertainly volatileinnatureanditsvolatilityhascertainlyposedsomethreatsto theIndianstock

38

marketconsideringitsinfluenceonthemarket.Giventhepresenceofforeigninstitutional investorsinSensexcompaniesandtheiractivetradingbehavior,smallandperiodicshifts intheirbehavior leadtomarketvolatility.Suchvolatilityisaninevitableresultofthe

structureofIndiasfinancialmarketsaswell.MarketsindevelopingcountrieslikeIndia shallowinatleastthreesenses.First,onlystocksofafewcompaniesare activelytradedinthemarket.Thus,althoughtherearemorethan8,000companieslisted onthestockexchange,theBSESensexincorporatesjust30companies,tradinginwhose sharesisseenasindicativeofmarketactivity.Second,ofthesestocksthereisonlyasmall proportionthatis routinelyavailablefor trading,with the

arethinor

restbeingheldbypromoters,the

financialinstitutionsandothersinterestedincorporatecontrolorinfluence.And,thirdthe numberof players trading these stocks is also small. Insuchascenarioinvestmentbytheforeigninstitutionalinvestorsleadstoasharpprice increasethisprovidesincentivestoFIIinvestmentandenhancesinvestmentandwhenthe correction in the stock pricesbeginsit would have to be apull out bythe FII and can result insharpdeclineintheprices.Theotherreasonfor volatilityisthat theforeigninstitutional increasethattendtobe

investorsareattractedtoamarketbytheexpectationofprice

automaticallyrealized,theinflowofforeigncapitalcanresultinanappreciation ofthe rupeevis-visthedollarThisincreases thereturnearnedinforeignexchange,whenrupee assetsare

soldandtherevenueconvertedintodollars.Asaresult,theinvestmentsturn evenmoreattractivetriggeringaninvestmentspiralthatwouldimplyasharperfallwhen anycorrectionbegins.ApartfromthatthegrowingrealizationbytheFIIsofthepower theywieldinwhatareshallowmarkets, encouragesspeculativeinvestmentaimed at

pushingthemarketupandchoosinganappropriatemomenttoexit.Thismanipulationof the market would certainly enhance the volatility and in volatile markets even the

domesticinvestorstrytomanipulatethemarketwhenthepricesarereallyhigh.Overall theforeigninstitutional investorshavebeenbullish ontheIndianstocks buttheproblemis beduetothe

thatthisbullishnaturemightbearesultoftheactivitiesoutsidetheIndianmarketitmight performanceoftheirequitymarketortheirnonequityreturns.Therefore theyseekoutforbestreturnsanddiversifiedgeographicalportfolioinordertohedgetheir riskandwhentheymakesomeadjustmentsintheirportfolioandmakeshiftsinfavoror

against

a
39

countryitborings about sharp changes.

14.ASTUDYOFMAJOR EPISODES OFVOLATILITY

14.1AsianMajor EpisodesofVolatility Excessvolatilityinducedbytheforeigninvestmentisoftentakenasanargumentagainst liberalization withsuchincidenceshappeninginthepast.Letusnowtrytofindout

whethertheforeigninvestorsinparticulardestabilizethecapitalmarketbeyondalevel. The two most common examples of such destabilization caused by the portfolio investmentparticularlythehedgefundsaretheAsiancrisisof1997andtheERMcrisis of 1992.
I. ERMcrisisThehigh-profileERMcrisisof1992camewithspeculatorsbetting

that the member countries of the European Monetary System (EMS) were convergingtotheEuropeanMonetaryUnion(EMU),andhighinflationcountries wouldhavetorealigntheirexchangerates,buttheextentofdepreciationwouldbe lessthantheinterestratedifferentialbetweenthehigh-inflationandlow-inflation countries.Theexpectationregardingtheextentofexchangerateadjustmentledto carrytradeborrowingfromthelowinterestERMcountriesandlendingtothe highinterestcountries,orintheforwardcurrencymarket,takingalongpositionin thehigheryieldingcurrencyandshortingthelower-yieldingcurrency.Inspiteof thematerialimpactofhedgefundactivitiesintheERMcrisis,theroleofthehedge fundsinthecrisiswaslimited.Thepracticeofextendinglinesofcredittooffshore entitiesonanon-recoursebasisagainstcollateralwasnotwidelyacceptedbymost banks, and foreign exchange trading was primarilyan inter-bank activity.

EastAsiancrisisAftertenyears(198697)ofpeggingoftheThaibahttotheU.S.
dollar,onJuly2,1997,thepeghadtobeabandoned,andthiscreatedpressure

40

onother broughtdowntheMalaysianringgit,theIndonesian

Asiancurrencies,andeventually

rupiah,thePhilippinepeso,andtheKoreanwon.Byend-1997,thesecurrencieshadlost between44and56percentoftheirvalueagainsttheU.S.dollar,bankruptingmanyAsian corporations and banks that had borrowed in foreign currencies, and leading to a significantcontractionoftheeconomies.ThisepisodeisknownastheEastAsiancrisis orAsian crisis.Foreigninvestorswereoftenblamedforthedramaticdifficultiesofthe

EastAsiancountriesatthetimesofthe1997crisis.Itwasbelievedthatthedeveloping countriesweremorevulnerabletovacillationsininternationalflowsthaneverbeforeA varietyofreasonsareadducedtoexplainwhyforeigninvestorscanhaveadestabilizing effect on capital markets in emerging economies. Foremostamong themarethe pursuit of apositivefeedbackstrategythatisbuyingwhenpricesarerisingandsellingwhenprices

arefalling,therebyexacerbatingboththeupswingsanddownswings.Positivefeedback leads tobubbleswhenpricesdepartfromfundamentalsandtocrasheswhenbubbles

burst.ItisalsobelievedthattheAsianfinancialcrisiswastheresultofapaniccreatedin themarketPrimeMinister MahathirMohammedofMalaysiaaccusedhedgefundsof being the modern equivalent of highwaymen in breaking the Asian currencies. AggressiveflowofthecarrytradedownthecreditspectruminAsiaduringthe1990s fromsovereigncredit,totop-tierdomesticcommercialbanks,tolower-tiercommercial banksandfinancecompanies,andfinallytofirms.Theexcessivebuild-upof debt,theyattributetotheconfidenceofdomesticcompaniesandbanksinthefixed officialexchangerate.FIIinvestmentinequitieshadlittleroletoplayinthecrisis.Fung, Hsieh, and Stsatsaronis(2000) report At the height of the episode, some Asian governmentofficialsaccusedspeculatorsandhedgefundsofattackingthecurrenciesand causingtheirdownfall.Apublicdebateensued,andthe InternationalMonetaryFund foreign

(IMF)respondedbyexaminingtheroleofhedgefundsintheAsiancurrencycrisis.The resulting studybyEichengreen, Mathieson,Chadha, Jansen,Kodres, and

DuringthestockmarketscamwhichshookthecapitalmarketinindiatheFII werealsooneofthemajorfactorswhichexacerbatesthefallinthesensex.During theBlackMondayepisode theFIIwerealsoonaheavysellingspreewhich

41

ultimatelylead to some major fall in the sensex value.

FIIinvestmentbehaviorduringthesefourspecificeventsindicatesthattheseeventsdid affect the behavior of the foreign portfolio investors.But, theseeventsdidaffect domestic investorsbehavioras well.

TheseexperiencesshowthatFIIoutflowofasmuchasabilliondollarsinamonth whichcorrespondstoanaverageof$40millionorRs.170croreperday observed.ThesevaluesRs.170croreperdayaresmallwhencomparedwithequity turnoverinIndia.Incalendar2004,grossturnoverontheequitymarketofRs.88lakh crorecontainedRs.5lakhcroreofgrossturnoverbyFIIs.Thissuggeststhatasyet,FIIs areasmallpartoftheIndianequitymarket.TransactionsbyFIIsofRs.5lakhcroreina yearmighthavebeenlargein1993,butthesuccessofaradicalnewmarketdesigninthe Indianequitymarkethaveledtoenormousgrowthofliquidityandmarketefficiencyon theequitymarket.Throughthis,Indiasabilitytoabsorbsubstantialtransactionsonthe equitymarket appears to be inplace. hasneverbeen

Thenet FII inflows into India have been less volatile compared to other emerging markets this stability could be attributed to several factors: Strong economic quality

fundamentalsandattractivevaluationofcompanies.Improvedregulatorystandards,high of disclosure and corporate governance requirement, accounting

standards,

shorteningofsettlementcycles,efficiencyofclearing andsettlementsystemsandrisk management mechanisms. Product diversificationand introduction of derivatives. Strengtheningof the rupee dollar exchange rateand low interest ratesinthe US.

I.

Post 2004 MajorVolatile Episodes: Asfromtheabove graph it is clear that in the monthof jan 2008 the BSE sensexwas alreadymoving down due to the weak global cues and US recessionand similarlythe FII investmentfelldrasticallyduringthatperiod running panickamongthe investors andfurther exacerbating the fall. But in the caseof mutual fund investmentwent up
42

duringthe time shows that the thedomestic institutional investorscash on thefall of sensex because of the strong fundamentals of the Indian capital market. Bylookingatthe above graph we can verywell saythat this timearound the fall of BSE sensex was majorlydue tothe FII which wenton a selling spreewhich lead to thefall of the marketduring this Crash.FII acted in thisfashion because of the weak global cues i.e atthatpoint of time other emergingmarkets were also down . Thefall of 769 points bysensex on Dec 17,2007 was attributed to the fact mainlydue tothe subprimelosses and also was exacerbated dueto the withdrawl of investments bytheFII.Asthesubprimelossesmainlyhit the US economyand the majorityof FII participating in the Indian capital market are from US .To coverthere losses in US theystarted selling in india which lead to the fall of sensexon that particular dayand subsequentdays.

DuringthemonthofOstober2007 usageofthe

indiangovttooksomestrictmeasuretocontrol

the

Participatorynotes.TherestrictionsproposedbySEBIinregulating

participatorynotesinasuddenannouncementwroughthavocintheoperationsofthe sharemarketcausingafallofover1,700pointsintheSensexonWednesday.SEBI

should have used some pragmatic caution by avoiding the announcement and introducing regulatorystepsina phasedmanner.Theshare marketis extremely

vulnerable to the sentiments created bytheutterances of those inregulatoryauthority. Thislead theFIItowithdrawfromtheIndianmarketas theywerenotsure ofhow the measuretakenbythegovtwillbeimplemented.Thisisclearlyvivblefromtheabove graphthatthistimearoundtheFIIwerethemaincauseofthecrashofthesensexon 18thoct.Butalsotherecomesaninterestingfactthattherewasalsoaheavyselling 22ndOctoberbut thistime the FIIWithdrawl on

effect was offset bythe Huge

investmentmadeby domesticinstitutionalinvestorspeciallyLIC,whichsavedthe market

43

froma heavymeltdown. Thereasons being given for the crash are the sale of Rs7300 crore(Rs73 Billion)sharwesby theUSFeds,a FIIsinthepast1week,anexpectedincreaseininterestratesby crashintheinternationalcommodityprices,andthestrawwhich

brokeitsbackseemstobeagovernmentcircularwhichwasinterpretedthatFIIs shouldbetaxed.PChidambaram,thecountrysFinanceMinister,issuedanevening press releasedenying thelatter.

15.STATISTICALANALYSIS ForthepurposeofstatisticalanalysisIhaveconsidered7yrsdataofFIINetInvestments, MutualFundsNet Invesments,NSES&PCNXNiftyandBSESensexIndices.Statistical

AnalysisiscarriedouttofindthedegreeofassociationbetweentheNetinvestmentsbythe institutionalinvestorswiththecapitalmarketi.e(Sensex&Niftyindices).Since7yearsdata isaverycomprehensivedataandtheinternalandtheextraneousfactorshavebeenchanging overthetimewhichdoeshaveimpactontheIndiancapitalmarket.Soinordertohave appropriatedataIcalculatedthevolatilityofBSESensexforeachyearandthendividedthem periods i.e2001-2003,2004-2005,2006-Feb 2008. Then Ihave applied into 3

regression

analysistofindoutthedegreeofassociationamongtheFIINetInvestments,theSensexand MutualFundInvestments,theSensex.Similarlythedegreeofassociationisbeencalculated Niftyindex with FII andMutual funds net investments. TocalculatethevolatilityoftheBSEIndex andtofindoutthedegreeofassociation,the formula and the methodologyis givenbelow. I. Volatility
44

for

Volatilityisameasureoftherangeofanassetpriceaboutitsmeanleveloverafixed amountoftime.Itfollowsthatvolatilityislinkedtothevarianceofanassetprice. stockislabeledasvolatilethenthepricewillvariesgreatlyovertime. Ifa Conversely,aless

volatilestockwillhaveapricethatwilldeviaterelativelylittleovertime.Sincevolatility isassociatedwithrisk,themorevolatilethatastockis,themoreriskyitis.Consequently, themoreriskyastockis,theharderitistosaywithanycertaintywhatthefuturepriceof thestock will be. Computing theVolatility Theestimationofvolatilitycomesfromamathematicalmodelofstockprices. The

mathematicalmodel we will use is based on three assumptions about stock pricesand their movements.Thefirstassumptionthatwewillbeusingisthatvolatilityisconstant. nextassumptionisthatstockpricescannotbenegative;onceastockpricereaches$0it cannotgoanylower. Thethirdassumptionisthatthepriceofastockisanormalrandom variable. The

Thusvolatilityiscalculatedasstandarddeviationasitisthestandardmeasurementdevice worldwidetocalculate the volatility. Standarddeviationisastatisticaltermthatprovidesagoodindicationofvolatility.It measureshowwidelyvalues(closingpricesforinstance)aredispersedfromtheaverage. Dispersionisdifferencebetweentheactualvalue(closingprice)andtheaveragevalue (meanclosingprice).Thelargerthedifferencebetweentheclosingpricesandtheaverage price,thehigherthestandarddeviationwillbeandthehigherthevolatility.Thecloserthe

used

closingpricesaretotheaverageprice,thelowerthestandarddeviationandthelowerthe volatility. StandardDeviation =(Xi-X)2

n
Where n Numberof observations,
_

Xbar - mean of observations, Xi ithobservation.

45

II.

RegressionAnalysis: RegressionAnalysisisanotherstatisticaltoolformeasuringtheassociationbetweentwo variables. It is a technique used to predict the nature and closeness of relationships

betweentwoormorevariables.Thisanalysishelpstheresearcherstoevaluatethecausal effectofonevariableonanothervariable.Itis variable usedtopredictthevariabilityinthe dependent

based on the information of one or more independent

variable.Regressionanalysis that involves two variable is termed as bivariate linear regressionanalysis.It is expressedas followingequation. Y=a+b*X Where Yis the dependent variable (Sensexand NiftyIndices) Xis theindependentvariable (FII Investments and Mutual Funds Investments). a& b are two constants which areknown as regressioncoefficients. b istheslopecoefficienti.ethevalueofbisthechangeinvalueofYwithcorresponding change in oneunit of X. Theconstant b can be calculated usingfollowingformula: b= n(XY)- XY n(X)2(-X)2

arepresentsYintercepts when X=0. a=Y-bX whereY=themeanof valuesof dependent variable. X=themean of valuesof independentvariable.

47

We now developthe estimated regressionequation =a+bX representstheestimatedvalue of dependent variable for a given value of X.

StrengthofAssociation - R2 Theabove developed estimated regression equation can only explain the nature of relationshipbetween two variables.However,if the researcher wants toknow how strong or weakthe relationshipisi.etowhatdegreethatthevariationinYcanbeexplainedby isused. R2 whichis measuredin X.thecoefficient of determination denoted by R2

percentage willexplain how muchof thetotal variation inYis explained byX variable. R2=explainedVariance/TotalVariance TotalVariance=ExplainedVariance UnexplainedVariance R2=(TotalVariance- UnexplainedVariance)/TotalVariance. UnexplainedVariance= (Yi-)2 Total variance=(Yi-Y)2 Tablesbelow give the resultsof theregressionanalysisdone on the data abovementioned. Theabovetablewhichshowstheresultoftheregressionanalysisdonewithssensexasthe dependentvariableandFIIastheindependentvariable.Volatilityiscalculatedforsensex andthetableshowsthatthesensexvolatilityhasbeenincreasingovertheyears.Thevalue impliesthattheintheyear20012003,thetotalvariationofsensexnearly27%is explainedbythevariationofFIIinvestments.Overthe yearsithasbeenfollowinga ofR2

decreasingtrendwhichisgoodfortheIndiancapitalmarket asthisshowsthatFII isnot theonlycriteria on which thevolatilityof sensex is dependent. Theabovetableshowstheanalysisranbetweenthesensexandthemutualfundsin india.Asweknowmutualfundsinindiaareat anascentstage.theresultofR 2 tellsus that the
48

dependencyof sensexvariation on the mutual fund investment has beenincreasing overthe years. TheAbovegraphshowsusthevolatilityofNiftyovertheperiodofsevenyearsandthe resultstellusthatthevolatilityhasbeenincreasedovertheyears.TheValueofR 2 tellsusthatthetotalvariationofniftyindex,nearly26%isexplainedbythevariationin netinvestment in the year2001-2003 and has been decreasing over theyears. also FII

Interpretation of theAnalysis. Nowlookingattheresulttableaboveitisclearlyvisiblethatvolatilityhasincreased tremendouslyduringtheyears.VolatilityhasincreasedsixtimesinthecaseofSensexand forniftyithasincreasedninetimesascomparedtowhatitwasthereintheyears20012003.Also the value of the constant ain the regression equation is following an increasingtrend whichtellstheeffectonthedependentvariablewhentheindependent variableiszero.Similarlytheconstantbwhichtellsthemagnitudinalchangewithone unitchangeintheindependentvariableisalsofollowingadecreasingtrendinthecaseof FIIinvestmentsbutinthecaseofmutualfundsitisshowinganincreasingtrendwhich tellsusthatdomesticinstitutionalinvestorsarealsorestoringfaithinthe marketand subsequentlytheyhaveincreasedthereparticipationinthecapitalmarket.Thedegreeof associationi.eRsquaretellsusanimportantfactthatslowlyandsteadilythedegreeof associationofFIIinvestmentswiththeSensexisdecreasing.Ittellsusthefactthatinthe year20012003around27%ofthetotalvarianceshownbysensexcouldbeexplainedby FIIinvestmentsinboththeleadingstockexchangesinindia.Alsointhesubsequentyears thevalueorRsquareisdecreasingincaseofFIIinvestmentsleadingtothefactthatthe volatilityeffectofFIIonthecapitalmarketisonthedecreasingtrend,whichisbeneficial fortheIndianstockmarket.AlsotheincreasingvalueofRsquareincaseofmutualfunds isalsoapositivesignfortheIndianstockmarketasittellsusthatthedomesticinvestors overtheyearshasshownincreasedparticipationandhelpedthemarkettostabliseinspite of such highvolatility.

49

Recommendations
Afteranalyzingthenatureandbehavioroftheforeigninstitutionalinvestmentinthepastandits influenceontheIndianstockmarketitwouldbesafeenoughtosaythatforeignfundsareoneof volatile instruments floating inthe market andneeds to be handled cautiously. themost

Governmentshouldcertainlyencourageforeigninstitutionalinvestmentbutshouldkeepacheck onthevolatility factor.Longtermfundsshouldbegivenpriorityandencouragedsomeofthe actions that could be taken to ensure stabilityare

Strengtheningdomestic institutional investors Theparticipationofdomesticpensionfundsintheequitymarketwouldaugmentthediversityof views on themarketand hence thedomestic pension funds must be encouraged . Broadbasingof eligible entities

Inordertoaddressthemarketintegrityconcernsarisingoutofallowingsomeentities,whichdo

nothave

reputationalriskorareunregulated,thereismeritinprohibitingsuchentitiesfrom gettingregistered. Operational flexibilityto impartstabilityto the market ThestabilityofforeigninvestmentinIndiawillbeenhancedifFIIsareabletoswitchbetween equityanddebtinvestmentsinIndia,dependingontheirviewaboutfutureequityreturns.SEBI canmakesuchpolicies. Knowledgeactivitiesand researchprograms There must be a lot of research programs and studies conducted by the economic affairs regulators in India

Conclusion
50

After

analyzingthenatureofFIIinthepastitwouldbesafeenoughtosaythattheforeignfunds

iscertainlyoneofthemostimportantcauseofvolatilityintheIndianstockmarketandhashada considerableinfluenceonit.Althoughitwouldnotbefairenoughtocometoanyconclusionas therearealotofotherfactorsbeyondthescopeofthestudythateffectreturnsandrisks.itisnot easytopredictthenatureofthemacroeconomicfactorsand their behaviorbutithasagreat seen

significanceonanyeconomyanditselements.Althoughgenerallyapositiverelationhasbeen

betweenthe stock market returns andthe FII inflows itis not easytosaywhichis the cause n whichis the effect and strange behavior has also been noticed inthe past.

Foreigninvestment certainly are influencing the Indian stock market but the extent of this influencecannot bedetermined orrathertheextentof Indias dependenceon theFIIs isa

subjectiveissueasonnocleargroundscanweseeapermanentrelationshipbetweenthestock marketreturnsandtheForeigninflows. Buttogeneralizetheyhaveshownapositiverelation

mostofthetimeapartfromafewoccasionswherethebehavioroftheirrelationwasdifficultto explain.

51

REFERENCES:

WEPSITE:
www.nseindia.com www.finmin.nic.in www.bseindia.com www.investopedia.com www.indiainfoline.com www.amfiindia.com www.livemint.com www.sebi.gov.in www.capitaline.com

52

ANEXURE: Table 1: Data of Sensex,Nifty,FIIand Mutual Fund NetInvestment

FII in Crore 106.7 345.9 200.6 -57.9 -31.8 -68.3 -32 -86.5 -185.8 -0.8 116 15.8 -164.6 -77.3 -13.3 -158.6 -281.8 198.8 632 895.3 820.4 1374 489.3 249.6 105.3 220.1 128.4 176.6 249.5 834.2 604.1 473 233.3 252 210.8 257 297.8 41.5 464.1 Mutual Funds in Crore 23.1 7.8 107.7 19.9 73.2 44.4 60.3 72 51.8 131.1 5.9 -9.3 -67.4 24.1 -29.8 -16.3 92.8 62.3 -24.6 -1 -49.2 -113 44 -16.2 17.6 -85.5 29.7 52.3 49.7 61.6 45.2 -132 22.2 -97.3 -49.4 -58.4 -73 82.3 239.7

Date 3-Jan-05 4-Jan-05 5-Jan-05 6-Jan-05 7-Jan-05 10-Jan-05 11-Jan-05 12-Jan-05 13-Jan-05 14-Jan-05 17-Jan-05 18-Jan-05 19-Jan-05 20-Jan-05 24-Jan-05 25-Jan-05 27-Jan-05 28-Jan-05 31-Jan-05 1-Feb-05 2-Feb-05 3-Feb-05 4-Feb-05 7-Feb-05 8-Feb-05 9-Feb-05 10-Feb-05 11-Feb-05 14-Feb-05 15-Feb-05 16-Feb-05 17-Feb-05 18-Feb-05 21-Feb-05 22-Feb-05 23-Feb-05 24-Feb-05 25-Feb-05 28-Feb-05

Sensex 6679.2 6651.01 6458.84 6367.39 6420.46 6308.54 6222.87 6102.74 6221.06 6173.82 6194.07 6192.35 6173.32 6183.24 6106.43 6162.98 6239.43 6419.09 6555.94 6552.47 6530.06 6619.97 6618.23 6535.17 6544.77 6593.53 6577.83 6633.76 6679.33 6670.06 6607.78 6589.29 6584.32 6534.68 6589.41 6582.5 6574.21 6569.72 6713.86

Nifty 2059.8 2080.5 2115 2103.75 2032.2 1998.35 2015.5 1982 1952.05 1913.6 1954.55 1931.1 1932.9 1934.05 1926.65 1925.3 1909 1931.85 1955 2008.3 2057.6 2059.85 2052.25 2079.45 2077.95 2055.1 2055.15 2070 2063.35 2082.05 2098.25 2089.95 2068.8 2061.9 2055.55 2043.2 2058.4 2057.1 2055.3

53

1-Mar-05 2-Mar-05 3-Mar-05 4-Mar-05 7-Mar-05 8-Mar-05 9-Mar-05 10-Mar-05 11-Mar-05 14-Mar-05 15-Mar-05 16-Mar-05 17-Mar-05 18-Mar-05 21-Mar-05 22-Mar-05 23-Mar-05 24-Mar-05 28-Mar-05 29-Mar-05 30-Mar-05 31-Mar-05 1-Apr-05 4-Apr-05 5-Apr-05 6-Apr-05 7-Apr-05 8-Apr-05 11-Apr-05 12-Apr-05 13-Apr-05 15-Apr-05 18-Apr-05 19-Apr-05 20-Apr-05 21-Apr-05 22-Apr-05 25-Apr-05 26-Apr-05 27-Apr-05 28-Apr-05 29-Apr-05 2-May-05 3-May-05 4-May-05 5-May-05 6-May-05 9-May-05

6651.08 6686.89 6784.72 6849.48 6878.98 6915.09 6892.82 6907.65 6853.73 6810.04 6752.45 6746.88 6669.52 6700.34 6656.69 6535.45 6454.46 6442.87 6510.74 6367.86 6381.4 6492.82 6605.04 6604.42 6550.29 6606.41 6545.64 6479.54 6397.52 6464.61 6467.92 6248.34 6156.78 6134.86 6243.74 6299.2 6346.57 6377.85 6339.98 6278.5 6284.2 6154.44 6195.15 6216.77 6289.55 6359.65 6388.48 6481.35

342.8 538.2 698.5 367.6 554.3 461.8 498.3 793.2 1310 130.7 2897.5 -46.1 -198.8 64.2 136 43.8 -42.5 -131.2 263.2 535.3 -1724 9.4 358.6 27.9 244 103.4 95.1 59.9 -54.3 70.5 -108.7 176.4 -574.4 -456.7 -124.1 -231.2 -22.8 284 12.9 -55.5 -133.9 -325.2 -34.3 -16 30.2 -67.6 123.3 127.3

105 -22.8 -172.3 46.4 175.8 216.1 142.4 -21.1 24.8 -38.6 49.9 -71.6 38.7 160.6 51.1 47.8 142.3 91.3 153.3 225.2 -70.8 183.3 95 77 104.5 16.8 41.9 -8 69.5 65.4 -2.5 57.3 49.9 27.1 225.1 138.6 -17.3 162.8 176.2 54.4 79.8 132 50 41.5 53.1 109.7 64.4 140

2060.9 2103.25 2084.4 2093.25 2128.85 2148.15 2160.1 2168.95 2160.8 2167.4 2154 2146.35 2128.95 2125.55 2098.5 2109.15 2096.6 2061.6 2026.4 2015.4 2029.45 1983.85 1993.7 2035.65 2067.65 2063.4 2052.55 2069.3 2052.85 2031.2 2008.2 2024.95 2025.45 1956.3 1927.8 1909.4 1929.7 1948.55 1967.35 1970.95 1957.1 1935.4 1941.3 1902.5 1916.75 1920.7 1942.6 1963.3

54

10-May-05 11-May-05 12-May-05 13-May-05 16-May-05 17-May-05 18-May-05 19-May-05 20-May-05 23-May-05 24-May-05 25-May-05 26-May-05 27-May-05 30-May-05 31-May-05 1-Jun-05 2-Jun-05 3-Jun-05 4-Jun-05 6-Jun-05 7-Jun-05 8-Jun-05 9-Jun-05 10-Jun-05 13-Jun-05 14-Jun-05 15-Jun-05 16-Jun-05 17-Jun-05 20-Jun-05 21-Jun-05 22-Jun-05 23-Jun-05 24-Jun-05 27-Jun-05 28-Jun-05 29-Jun-05 30-Jun-05 1-Jul-05 4-Jul-05 5-Jul-05 6-Jul-05 7-Jul-05 8-Jul-05 11-Jul-05 12-Jul-05 13-Jul-05

6454.71 6445.13 6456.82 6451.54 6528.03 6466 6447 6478.94 6499.5 6539.83 6565.37 6597.6 6670.78 6707.72 6663.55 6715.11 6729.9 6655.56 6748.85 6753 6758.19 6781.25 6858.24 6832.53 6781.99 6832.68 6860.18 6906.98 6900.41 6906.52 6984.55 7076.52 7145.34 7119.76 7148.62 7151.08 7049 7119.88 7193.85 7210.77 7277.31 7220.25 7287.6 7145.13 7212.08 7306.74 7303.95 7247.91

39 -98.7 -173.2 -44.5 190.7 -188.3 -74 -438.5 63.5 -22.9 64 -162.5 -10.9 -185.1 -446.9 185.3 298.5 205.2 125.5 302.5 32.7 87.7 76.4 292.8 293.5 261.9 -2131.3 185.3 392.8 418.3 229.5 460.8 298.9 1467.6 485.3 354.2 275.5 521.9 393.1 732.1 314.5 196 380.3 387.8 405.9 322.3 462.6 376.9

110.2 213.4 187 99.2 167.4 286.4 374.5 180.9 446.3 123.6 77.7 70.2 366.9 293.2 123.8 68.8 -136.3 -75.4 20.3 -111.3 -102.5 0.9 -2 23.6 46.4 -36.9 -30.1 4.7 21.5 -13.9 -86.3 -166.8 -228.1 -68.2 -306.3 -317.3 -32.9 -88.4 -211.9 -73.9 -57.6 -187.8 0.2 -62.9 -37.7 -103.3 -92.8 -111.1

1977.5 2000.75 1994.3 1985.95 1993.15 1988.3 2012.6 1990.8 1982.75 1990.85 1992.4 2013.9 2028.6 2043.85 2074.7 2076.4 2072.4 2087.55 2087.55 2064.65 2094.25 2092.35 2092.8 2098.15 2112.4 2103.2 2090.6 2102.75 2112.35 2128.65 2123.7 2123.4 2144.35 2170 2187.35 2183.85 2194.35 2199.8 2169.85 2191.65 2220.6 2211.9 2230.65 2210.75 2228.2 2179.4 2196.2 2218.85

55

14-Jul-05 15-Jul-05 18-Jul-05 19-Jul-05 20-Jul-05 21-Jul-05 22-Jul-05 25-Jul-05 26-Jul-05 27-Jul-05 29-Jul-05 1-Aug-05 2-Aug-05 3-Aug-05 4-Aug-05 5-Aug-05 8-Aug-05 9-Aug-05 10-Aug-05 11-Aug-05 12-Aug-05 16-Aug-05 17-Aug-05 18-Aug-05 19-Aug-05 22-Aug-05 23-Aug-05 24-Aug-05 25-Aug-05 26-Aug-05 29-Aug-05 30-Aug-05 1-Sep-05 2-Sep-05 5-Sep-05 6-Sep-05 8-Sep-05 9-Sep-05 12-Sep-05 13-Sep-05 14-Sep-05 15-Sep-05 16-Sep-05 19-Sep-05 20-Sep-05 21-Sep-05 22-Sep-05 23-Sep-05

7187.7 7271.54 7347.1 7346.63 7342.89 7304.32 7423.25 7505.6 7552.77 7605.03 7635.42 7669.45 7756.04 7756.47 7797.08 7754 7606.17 7595.57 7729.82 7816.51 7767.49 7768.24 7859.53 7811.33 7780.76 7750.6 7615.99 7612 7660.42 7680.22 7634.43 7745 7876.15 7899.77 7925.24 7946.78 8052.56 8060.01 8138.42 8193.96 8189.48 8283.76 8380.96 8444.84 8500.28 8487.14 8221.64 8222.59

253 176.6 204.6 369.4 388.1 317.7 299.1 1040.6 621.5 490.9 194.2 1010.2 642.7 563.8 279.8 241 807.2 419.9 118.7 -101.3 -0.2 274.9 17.6 156.3 47.1 -77.1 9.4 60.6 -110.5 306.8 117 9.2 371.4 313.1 234 247.9 70.7 543.3 -50 167.6 418.2 158.7 407.2 443.7 101.1 321.9 307.6 514.4

-125.9 -138.8 40.5 106.6 10.1 63.4 70.8 35.9 148 143.7 180.6 108.4 343.8 -134.4 116.1 204.4 94.7 68.1 -86.8 -93.4 189.1 235.6 505.6 132 43.1 110.1 -33 70.7 95.9 170.8 157 45.5 47.1 197.2 177.8 192.3 88.8 -45.5 183.3 284.6 315.9 270.3 132.2 39.6 164.4 121.2 74.9 90.9

2220.8 2204.05 2185.1 2212.55 2234 2237.3 2241.9 2230.5 2265.6 2291.75 2303.15 2319.1 2312.3 2318.05 2353.65 2357 2367.8 2361.2 2324.4 2318.7 2360.15 2380.9 2361.55 2369.8 2403.15 2388.45 2383.45 2367.85 2326.1 2322.5 2354.55 2357.05 2337.65 2367.75 2405.75 2415.8 2422.95 2428.65 2454.45 2455.45 2484.15 2500.35 2492.45 2523.95 2552.35 2567.1 2578 2567.3

56

26-Sep-05 27-Sep-05 28-Sep-05 29-Sep-05 30-Sep-05 3-Oct-05 4-Oct-05 5-Oct-05 6-Oct-05 7-Oct-05 10-Oct-05 11-Oct-05 13-Oct-05 14-Oct-05 17-Oct-05 18-Oct-05 19-Oct-05 20-Oct-05 21-Oct-05 24-Oct-05 25-Oct-05 26-Oct-05 27-Oct-05 28-Oct-05 1-Nov-05 2-Nov-05 7-Nov-05 8-Nov-05 9-Nov-05 10-Nov-05 11-Nov-05 14-Nov-05 16-Nov-05 17-Nov-05 18-Nov-05 21-Nov-05 22-Nov-05 23-Nov-05 24-Nov-05 25-Nov-05 26-Nov-05 28-Nov-05 29-Nov-05 1-Dec-05 2-Dec-05 5-Dec-05 6-Dec-05 7-Dec-05

8478.91 8525.52 8606.03 8650.17 8634.48 8697.65 8799.96 8724.47 8528.7 8491.56 8483.86 8540.56 8376.9 8201.73 8202.62 8122.25 7971.06 7935.12 8068.95 7920.8 7991.74 7974.69 7798.49 7685.64 7944.1 8072.75 8206.83 8317.8 8308.78 8308.93 8471.04 8494.29 8595.92 8649.52 8686.65 8610.74 8534.97 8638.34 8744.04 8853.21 8889.03 8994.94 8931.16 8944.78 8961.61 8823.31 8815.53 8895.81

-325.5 199.3 26.3 42.5 133.4 -36.9 -118.4 421.6 54.1 -568.5 -291.9 74.4 -135.5 -399.6 293.1 -299.1 -223.8 -196.7 -71.1 -404.4 -132.1 -232.7 -453.6 -755.1 -148.6 50.6 384.5 530.8 609.2 99.1 -137 29.2 34 145.3 90.8 286.3 423.7 167.6 311.9 461.4 247.9 39.4 158.7 261.5 425.1 514.7 -46.8 72.8

1.5 86.1 133.3 231.4 200.2 454.4 27 156.3 -42 -149.5 71.3 210.7 -66.9 177.7 23.2 -80.7 237.4 312.7 596.8 25.7 276.7 189.8 285.5 92 223.8 202.6 2.8 -124.3 -28 -38.1 -83.3 207.1 69.6 107.5 114.3 117 -96.7 35.4 0.4 103.7 65.2 17.9 176.6 -33.1 -333.4 -52.2 -183.1 183.5

2476.5 2477.75 2557.35 2574.85 2598.05 2611.2 2601.4 2630.05 2663.35 2644.4 2579.15 2574.05 2566.85 2589.55 2537.3 2484.4 2485.15 2468.2 2412.45 2395.45 2443.75 2394.85 2418.2 2408.5 2352.9 2316.05 2386.75 2419.05 2461.6 2492.65 2489.1 2500.7 2548.65 2558.7 2582.75 2603.95 2620.05 2602.5 2572.85 2608.6 2635 2664.3 2683.45 2712 2698.3 2698.95 2697.95 2660.5

57

8-Dec-05 9-Dec-05 12-Dec-05 13-Dec-05 14-Dec-05 15-Dec-05 16-Dec-05 19-Dec-05 20-Dec-05 21-Dec-05 22-Dec-05 23-Dec-05 26-Dec-05 27-Dec-05 28-Dec-05 29-Dec-05 30-Dec-05 2-Jan-06 3-Jan-06 4-Jan-06 5-Jan-06 6-Jan-06 9-Jan-06 10-Jan-06 12-Jan-06 13-Jan-06 16-Jan-06 17-Jan-06 18-Jan-06 19-Jan-06 20-Jan-06 23-Jan-06 24-Jan-06 25-Jan-06 27-Jan-06 30-Jan-06 31-Jan-06 1-Feb-06 2-Feb-06 3-Feb-06 6-Feb-06 7-Feb-06 8-Feb-06 10-Feb-06 13-Feb-06 14-Feb-06 15-Feb-06 16-Feb-06

8906.31 9067.28 9133.67 9263.9 9241.76 9170.4 9284.46 9394.27 9346.24 9339.17 9372.3 9256.91 9085.89 9283.16 9257.51 9323.25 9397.93 9390.14 9539.37 9648.08 9617.74 9640.29 9583.45 9445.3 9380.88 9374.19 9311.19 9314.13 9237.53 9449.84 9520.96 9464.9 9549.92 9685.74 9870.79 9849.03 9919.89 9859.26 9843.87 9742.58 9980.42 10082.28 10044.82 10110.97 10173.25 10086.63 10113.18 10124.3

-68.5 -41 420.1 281.2 1163.9 432.6 542.1 2685.5 1125.1 322 384.7 260.6 241.6 56 21.6 144.9 135.3 526.9 477.7 466.6 912 86.9 344.5 397 -2.2 -1028.9 7.6 -32.4 320.3 2.3 81.4 55 -318.2 42.1 820 719.1 -200.1 217.4 508.1 364.1 626.5 796.5 935.6 -118.3 614.4 335.5 -501.6 -57.7

124.7 241.9 48.8 -128.8 -134.3 -295.5 -145.3 -420.1 -5.3 -155.9 -82.9 -95.9 7.7 -19.7 126.9 29.9 189.1 -222.6 -73.2 -106.5 58.8 -14.6 -310.2 -153.8 321.1 -28.9 -216.4 -301.8 -262.5 47.6 4.3 -52.1 -58.3 -230.8 326.9 94.1 6.7 -25.4 -51.3 44.7 -330 139.6 0.2 -106.4 -43 45.8 59.6 46.9

2662.3 2693 2706.7 2756.45 2776.2 2812.3 2804.55 2778.55 2810.15 2842.6 2826.2 2822.9 2835.25 2804.85 2749.6 2805.9 2798 2835.95 2883.35 2904.4 2899.85 2914 2910.1 2870.8 2850.7 2850.55 2833.1 2829.1 2809.2 2870.85 2900.95 2884.05 2908 2940.35 2982.75 2974.5 3001.1 2971.55 2967.45 2940.6 3000.45 3020.1 3008.95 3027.55 3041.15 3017.55 3022.2 3021.6

58

17-Feb-06 20-Feb-06 21-Feb-06 22-Feb-06 23-Feb-06 24-Feb-06 27-Feb-06 28-Feb-06 1-Mar-06 2-Mar-06 3-Mar-06 6-Mar-06 7-Mar-06 8-Mar-06 9-Mar-06 10-Mar-06 13-Mar-06 14-Mar-06 16-Mar-06 17-Mar-06 20-Mar-06 21-Mar-06 22-Mar-06 23-Mar-06 24-Mar-06 27-Mar-06 28-Mar-06 29-Mar-06 30-Mar-06 31-Mar-06 3-Apr-06 4-Apr-06 5-Apr-06 7-Apr-06 10-Apr-06 12-Apr-06 13-Apr-06 17-Apr-06 18-Apr-06 19-Apr-06 20-Apr-06 21-Apr-06 24-Apr-06 25-Apr-06 26-Apr-06 27-Apr-06 28-Apr-06 29-Apr-06

9981.11 10079.3 10168.11 10224.32 10244.05 10200.76 10282.09 10370.24 10565.47 10626.78 10595.43 10735.36 10725.67 10508.85 10573.54 10765.16 10803.71 10801.72 10878.74 10860.04 10941.11 10905.2 10841.35 10840.59 10950.3 11079.02 11086.03 11183.48 11307.04 11279.96 11564.36 11638.01 11746.9 11589.44 11662.55 11355.73 11237.23 11539.68 11821.57 11895.98 12039.55 12030.3 11915.24 11646.78 11938.53 11835.02 11851.93 12042.56

247.1 344.4 586.1 125.3 417.4 761.4 1001.8 383.8 201.8 576 645.7 389.8 247.1 222.5 832.3 -287 624.8 229.5 164.6 24.2 474.9 148.2 181.7 300.6 56.3 137.5 550.2 371.7 93.9 502.5 45.2 477.9 132.4 314 -427.1 -421.7 -734.8 -960.5 252.9 -273.9 -201.1 224.9 151.5 194.8 -508.8 -206.2 2513.8 -51.4

69.9 -157.6 -18.8 22.8 -70 -149.5 59.7 217.3 204.1 135.5 -25.2 229.5 -64.4 483.6 217.8 413.2 289.9 40.4 138 460.5 101.9 209.3 63.8 56 -51.7 517.7 317.8 52.3 256.7 439.6 211.7 1.8 117.7 284.8 -197.1 185.5 521.5 202.7 112.5 68.6 159.3 25.6 77.3 217.4 327.7 521.4 194.2 82.3

2981.5 3005.85 3035.5 3050.8 3062.1 3050.05 3067.45 3074.7 3123.1 3150.7 3147.35 3190.4 3182.8 3116.7 3129.1 3183.9 3202.65 3195.35 3226.6 3234.05 3265.65 3262.3 3240.15 3247.15 3279.8 3321.65 3325 3354.2 3418.95 3402.55 3473.3 3483.15 3510.9 3454.8 3478.45 3380 3345.5 3425.15 3518.1 3535.85 3573.5 3573.05 3548.9 3462.65 3555.75 3508.1 3508.35 3557.6

59

2-May-06 3-May-06 4-May-06 5-May-06 8-May-06 9-May-06 10-May-06 11-May-06 12-May-06 15-May-06 16-May-06 17-May-06 18-May-06 19-May-06 22-May-06 23-May-06 24-May-06 25-May-06 26-May-06 29-May-06 30-May-06 31-May-06 1-Jun-06 2-Jun-06 5-Jun-06 6-Jun-06 7-Jun-06 8-Jun-06 9-Jun-06 12-Jun-06 13-Jun-06 14-Jun-06 15-Jun-06 16-Jun-06 19-Jun-06 20-Jun-06 21-Jun-06 22-Jun-06 23-Jun-06 25-Jun-06 26-Jun-06 27-Jun-06 28-Jun-06 29-Jun-06 30-Jun-06 3-Jul-06 4-Jul-06 5-Jul-06

12218.78 12310.72 12347.63 12359.7 12462.47 12513.86 12612.38 12435.41 12285.11 11822.2 11873.73 12217.81 11391.43 10938.61 10481.77 10822.78 10573.15 10666.32 10809.35 10853.14 10786.63 10398.61 10071.42 10451.33 10213.48 9957.32 9756.76 9295.81 9810.46 9476.15 9062.65 8929.44 9545.06 9884.51 9997.84 9822.52 10040.14 10275.88 10401.3 10412.93 10042.06 10151.01 10129.7 10162.16 10609.25 10695.26 10662.22 10919.64

60.9 218.5 907.2 322.6 1108.1 366.5 460.5 322.9 -1199.1 18.6 -728.4 -533.4 -423.5 -810.6 -1361.3 -929.8 -1243.2 -1935 -1632.8 -252.7 -81.8 -8.4 -832.3 -282.2 640.4 571 84.8 31.9 111.2 508.9 97.9 -81.8 -363.4 139.9 659.5 21.9 -199.6 91.6 -202.6 -67.5 7 -26.8 -111.1 -39 -280.2 106.3 254.8 214.7

48.8 142.4 274.9 234.4 -170.8 151.5 528.2 -67.9 356.2 785.4 343.2 193.3 762.7 848.3 402.8 533.7 1162 408.7 222.8 145.1 267.5 320.3 125.6 -109.4 -417.4 -257.7 -217.6 -231.5 -302.8 -12.4 -292.4 -338.2 7.2 -81.4 -52.7 -62 97.9 83.3 -181.6 -10.9 -127.5 -31.3 -40.8 42.9 433.8 -74.5 -90.6 -68.5

3605.45 3634.25 3648.4 3663.95 3693.15 3720.55 3754.25 3701.05 3650.05 3502.95 3523.3 3635.1 3388.9 3246.9 3081.35 3199.35 3115.55 3177.7 3209.6 3214.9 3185.3 3071.05 2962.25 3091.35 3016.65 2937.3 2860.45 2724.35 2866.3 2776.85 2663.3 2632.8 2798.8 2890.35 2916.9 2861.3 2923.45 2994.75 3042.7 3050.3 2943.2 2982.45 2981.1 2997.9 3128.2 3150.95 3138.65 3197.1

60

6-Jul-06 7-Jul-06 10-Jul-06 11-Jul-06 12-Jul-06 13-Jul-06 14-Jul-06 17-Jul-06 18-Jul-06 19-Jul-06 20-Jul-06 21-Jul-06 24-Jul-06 25-Jul-06 26-Jul-06 27-Jul-06 28-Jul-06 31-Jul-06 1-Aug-06 2-Aug-06 3-Aug-06 4-Aug-06 7-Aug-06 8-Aug-06 9-Aug-06 10-Aug-06 11-Aug-06 14-Aug-06 16-Aug-06 17-Aug-06 18-Aug-06 21-Aug-06 22-Aug-06 23-Aug-06 24-Aug-06 25-Aug-06 28-Aug-06 29-Aug-06 30-Aug-06 1-Sep-06 4-Sep-06 5-Sep-06 6-Sep-06 7-Sep-06 8-Sep-06 11-Sep-06 12-Sep-06 13-Sep-06

10767.97 10509.53 10684.3 10614.35 10930.09 10858.5 10678.22 10293.22 10226.78 10007.34 10352.94 10085.91 10215.37 10415.61 10617.27 10741.59 10680.23 10743.88 10751.66 10876.19 10923.16 10866.51 10812.64 11014.97 11145.18 11149.17 11192.46 11312.99 11448.31 11477.48 11465.72 11511.68 11502.62 11406.65 11531.95 11572.2 11619.52 11706.85 11723.92 11778.02 11914.21 11904.6 11933.21 11853.85 11918.65 11550.69 11660.79 11893.79

556 9.1 -435.9 -47.4 -133.5 375.3 14.1 -343.6 -567.5 -307.1 89.9 321.3 -53.5 31.5 229.8 238 461.7 131.2 355.8 -46.3 104.1 240.1 -47 115.9 298.6 250.5 151.9 63.5 10.6 952 808.8 519.1 42.7 -9.7 -52.1 67.6 67.8 43.4 368.9 487.1 236.6 451.1 -69.6 451.2 -16.3 -48.9 94.7 -120.6

-213.4 -416.3 62.3 -16.2 132.3 -15.9 -24.2 -38.3 142 -125.9 -80.1 4.3 88.6 235.2 276.1 262.8 -80 -40.8 -115.5 -100.5 171.2 77.6 99.3 -126.6 198 21.3 47.5 32.5 27 -23.8 -56.8 3.5 -28.1 -227.5 58.6 194 -10.8 73.1 58.3 54.5 -118 -57.6 62.2 128.7 -119.8 192.8 -79.5 112.5

3156.4 3075.85 3142 3116.15 3195.9 3169.3 3123.35 3007.55 2993.65 2932.75 3023.05 2945 2985.85 3040.5 3110.15 3156.15 3130.8 3143.2 3147.8 3182.1 3190 3176.75 3151.1 3212.4 3254.6 3260.1 3274.35 3313.1 3356.05 3353.9 3356.75 3366 3364.6 3335.8 3370.4 3385.95 3401.1 3425.7 3430.35 3413.9 3435.45 3476.85 3473.75 3477.25 3454.55 3471.45 3366.15 3389.9

61

14-Sep-06 15-Sep-06 18-Sep-06 19-Sep-06 20-Sep-06 21-Sep-06 22-Sep-06 25-Sep-06 26-Sep-06 27-Sep-06 28-Sep-06 29-Sep-06 3-Oct-06 4-Oct-06 5-Oct-06 6-Oct-06 9-Oct-06 10-Oct-06 11-Oct-06 12-Oct-06 13-Oct-06 16-Oct-06 17-Oct-06 18-Oct-06 19-Oct-06 20-Oct-06 21-Oct-06 23-Oct-06 26-Oct-06 27-Oct-06 30-Oct-06 1-Nov-06 2-Nov-06 3-Nov-06 6-Nov-06 7-Nov-06 8-Nov-06 9-Nov-06 10-Nov-06 13-Nov-06 14-Nov-06 15-Nov-06 16-Nov-06 20-Nov-06 21-Nov-06 22-Nov-06 23-Nov-06 24-Nov-06

11973.02 12009.59 12071.3 11970.47 12109.14 12274.27 12236.78 12173.91 12321.19 12366.91 12380.74 12454.42 12366.39 12204.01 12389.41 12372.81 12365.83 12363.77 12353.49 12537.98 12736.42 12928.18 12883.83 12858.48 12723.59 12709.4 12736.82 12623.28 12698.41 12906.81 13024.26 13033.04 13091.12 13130.79 13186.89 13156.66 13072.51 13137.49 13282.91 13399 13425.5 13469.37 13505.89 13430.71 13616.77 13706.53 13680.83 13703.33

519.4 491.5 459 495.1 276.6 236 288.8 152.1 -268.5 34.9 555 719.5 1293.5 -294.3 -419.4 123.7 71 -45.7 96.4 803.4 539.3 1093.8 794.7 389 1007.9 -37.1 444.1 -23.2 168.8 493.3 496.7 323.8 368.5 139.1 227.4 422.9 335.5 -6.2 526.9 478.1 778.2 1523.8 99.6 1302.7 58 642.3 -21.1 1178.7

381.8 -2.4 -16.8 -1.9 63.8 -269.3 191.6 -135.3 224 468.5 -115.5 308.7 121.1 19.1 -131.5 89.2 116.8 -81.7 -108.6 100.2 -37.7 -40.8 65.6 -121.1 -176.7 -71 -1.3 -4.9 -105.1 -5.1 289.6 147.4 53.9 344.7 146 77.7 164.3 -15 -274.9 -155.2 129.9 52.1 -108 206.5 362.4 85.8 -285.8 -78.8

3454.55 3471.6 3478.6 3492.75 3457.35 3502.8 3553.05 3544.05 3523.45 3571.75 3579.3 3571.75 3588.4 3569.6 3515.35 3564.9 3569.7 3567.15 3571.05 3558.55 3621.05 3676.05 3723.95 3715 3710.65 3677.8 3676.85 3683.5 3657.3 3677.55 3739.35 3769.1 3744.1 3767.05 3791.2 3805.35 3809.25 3798.75 3777.3 3796.4 3834.75 3858.75 3865.9 3876.3 3876.85 3852.8 3856.15 3918.25

62

27-Nov-06 28-Nov-06 29-Nov-06 1-Dec-06 4-Dec-06 5-Dec-06 6-Dec-06 7-Dec-06 8-Dec-06 11-Dec-06 12-Dec-06 13-Dec-06 14-Dec-06 15-Dec-06 18-Dec-06 19-Dec-06 20-Dec-06 21-Dec-06 22-Dec-06 26-Dec-06 27-Dec-06 28-Dec-06 29-Dec-06 2-Jan-07 3-Jan-07 4-Jan-07 5-Jan-07 8-Jan-07 9-Jan-07 10-Jan-07 11-Jan-07 12-Jan-07 15-Jan-07 16-Jan-07 17-Jan-07 18-Jan-07 19-Jan-07 22-Jan-07 23-Jan-07 24-Jan-07 25-Jan-07 29-Jan-07 2-Feb-07 5-Feb-07 6-Feb-07 7-Feb-07 8-Feb-07 9-Feb-07

13773.59 13601.95 13616.73 13844.78 13874.33 13937.65 13949 13972.03 13799.49 13399.43 12995.02 13181.34 13487.16 13614.52 13731.09 13382.01 13340.21 13384.86 13471.74 13708.34 13859.69 13846.34 13786.91 13942.24 14014.92 13871.71 13860.52 13652.15 13566.33 13362.16 13630.71 14056.53 14129.64 14114.73 14131.34 14217.75 14182.71 14209.24 14041.24 14110.46 14282.72 14211.96 14403.77 14515.9 14478.19 14643.13 14652.09 14538.9

994.6 405.6 -335.3 258.1 349.3 -2813.8 433.2 244.2 10.1 -152.6 422.3 95.2 -96.9 148.6 -46 -182.7 -673.4 -365.1 264.8 8.2 -153 -368.2 -1049.7 331.9 3353.3 207.8 -262.2 0.9 -3075.7 -368.2 -1106.8 159.2 207 -238.9 101.3 91.2 111.9 76.8 319.8 269.1 172.7 141 -469.7 664.6 345 656 545.4 698.9

206.3 -276.2 -339.5 -26.1 -269 116.5 -88.4 304.3 43.1 50.5 -177.4 4.2 67.8 -657.2 -550.1 -231.8 -71.7 150 45.5 10.7 460.5 236.2 347.9 336.4 356.1 677.1 225.1 -8 193.8 -21.4 15.5 -148.3 -364.6 -123.6 -328.4 637.1 103.5 71.8 89.6 59 -402 -54.2 -537.1 -351.2 145.9 -66.9 -77.6 -165.5

3954.75 3945.45 3950.85 3968.9 3921.75 3928.2 3954.5 3997.6 4001 4015.75 4015.95 4015.35 3962 3849.5 3716.9 3765.2 3843.05 3888.65 3928.75 3832 3815.55 3833.5 3871.15 3940.5 3974.25 3970.55 3966.4 4007.4 4024.05 3988.8 3983.4 3933.4 3911.4 3850.3 3942.25 4052.45 4078.4 4080.5 4076.45 4109.05 4090.15 4102.45 4066.1 4089.9 4147.7 4124.45 4183.5 4215.35

63

12-Feb-07 13-Feb-07 14-Feb-07 15-Feb-07 19-Feb-07 20-Feb-07 21-Feb-07 22-Feb-07 23-Feb-07 26-Feb-07 27-Feb-07 28-Feb-07 1-Mar-07 2-Mar-07 5-Mar-07 6-Mar-07 7-Mar-07 8-Mar-07 9-Mar-07 12-Mar-07 13-Mar-07 14-Mar-07 15-Mar-07 16-Mar-07 19-Mar-07 20-Mar-07 21-Mar-07 22-Mar-07 23-Mar-07 26-Mar-07 28-Mar-07 29-Mar-07 30-Mar-07 2-Apr-07 3-Apr-07 4-Apr-07 5-Apr-07 9-Apr-07 10-Apr-07 11-Apr-07 12-Apr-07 13-Apr-07 16-Apr-07 17-Apr-07 18-Apr-07 19-Apr-07 20-Apr-07 23-Apr-07

14190.7 14090.98 14009.9 14355.55 14402.9 14253.38 14188.49 14021.31 13632.53 13649.52 13478.83 12938.09 13159.55 12886.13 12415.04 12697.09 12579.75 13049.35 12884.99 12902.63 12982.98 12529.62 12543.85 12430.4 12644.99 12705.94 12945.88 13308.03 13285.93 13124.32 12884.34 12979.66 13072.1 12455.37 12624.58 12786.77 12856.08 13177.74 13189.54 13183.24 13113.81 13384.08 13695.58 13607.04 13672.19 13619.7 13897.41 13928.33

274.6 218.7 -239.6 210.5 617.1 220.2 473.9 -40.2 -225.2 4287.2 -582.1 -415.7 -1644.3 -438.7 324.9 -312.7 -570.4 84.1 115.8 395.7 204.3 -84 -861.4 18.5 2.1 -250 136.3 164.5 713.1 678.5 80.5 520.2 -359 840.8 -473.5 -169.9 -2.2 567.5 569.4 402.6 101.9 55.2 475.7 788.3 648.5 640.1 -73.4 748.7

-28.3 -37.8 -193.1 -190.8 -389.4 24.9 -481.1 104.9 130.8 3 17.8 0.7 37.2 270.6 348.6 243.9 -29.1 -125.3 166.1 68.4 -379.6 -39.8 -384.3 -145.8 -13.5 38.2 -206.4 -209.6 33.1 57 -56.3 91.8 -168.2 -295.3 -206.8 93.7 5.8 70.5 -102.1 -138.1 41 46.3 -470.1 289.4 -21 262.2 204.9 -251.1

4195.9 4224.25 4223.4 4187.4 4058.3 4044.55 4047.1 4146.2 4164.55 4106.95 4096.2 4040 3938.95 3942 3893.9 3745.3 3811.2 3726.75 3576.5 3655.65 3626.85 3761.65 3718 3734.6 3770.55 3641.1 3643.6 3608.55 3678.9 3697.6 3764.55 3875.9 3861.05 3819.95 3761.1 3798.1 3821.55 3633.6 3690.65 3733.25 3752 3843.5 3848.15 3862.65 3829.85 3917.35 4013.35 3984.95

64

24-Apr-07 25-Apr-07 26-Apr-07 27-Apr-07 30-Apr-07 3-May-07 4-May-07 7-May-07 8-May-07 9-May-07 10-May-07 11-May-07 14-May-07 15-May-07 16-May-07 17-May-07 18-May-07 21-May-07 22-May-07 23-May-07 24-May-07 25-May-07 28-May-07 29-May-07 30-May-07 31-May-07 1-Jun-07 4-Jun-07 5-Jun-07 6-Jun-07 7-Jun-07 8-Jun-07 11-Jun-07 12-Jun-07 13-Jun-07 14-Jun-07 15-Jun-07 18-Jun-07 19-Jun-07 20-Jun-07 21-Jun-07 22-Jun-07 25-Jun-07

14136.72 14217.77 14228.88 13908.58 13872.37 14078.21 13934.27 13879.25 13765.46 13781.51 13771.23 13796.16 13965.86 13929.33 14127.31 14299.71 14303.41 14418.6 14453.72 14363.26 14218.11 14338.45 14397.89 14508.21 14411.38 14544.46 14570.75 14495.77 14535.01 14255.93 14186.18 14063.81 14083.41 14130.95 14003.03 14203.72 14162.71 14080.14

-68.5 501.5 961.5 359.8 -194.8 -304.6 56.2 212 96.7 -222.1 23.3 191.5 -336.2 60.5 -330.8 -139.2 1060.8 1260.3 477.6 450.8 446 319.5 -147.1 324.2 837.4 -377.1 310.4 482.4 222.1 -37.8 -69.6 -222.8 -936.2 -54.6 545.3 -307.8 211.8 -13 -28.9 653.1 -117 1641.6 78.2

19.1 -25.8 190.8 252.6 361.1 251.8 17.8 -38.7 71.2 298 109 21.7 -18.8 -124.2 226.6 100.7 40.1 -77.8 335.6 630.5 -135 313 -47.5 16.2 -446.8 38.3 153.3 -2.2 411.4 65.2 365.5 15.6 51.1 -134 -38.5 232.4 -23.2 -326.8 -67.9 -33.1 209.4 208.2 -33.9

4011.6 3997.65 4083.55 4085.1 4141.8 4167.3 4177.85 4083.5 4087.9 4150.85 4117.35 4111.15 4077 4079.3 4066.8 4076.65 4134.3 4120.3 4170.95 4219.55 4214.5 4260.9 4278.1 4246.2 4204.9 4248.15 4256.55 4293.25 4249.65 4295.8 4297.05 4267.05 4284.65 4198.25 4179.5 4145 4145.6 4155.2 4113.05 4170 4171.45 4147.1 4214.3

14295. 5 14411. 95 14499. 24 14467. 36 14487. 72

65

26-Jun-07 27-Jun-07 28-Jun-07 29-Jun-07 2-Jul-07 3-Jul-07 4-Jul-07 5-Jul-07 6-Jul-07 9-Jul-07 10-Jul-07 11-Jul-07 12-Jul-07 13-Jul-07 16-Jul-07 17-Jul-07 18-Jul-07 19-Jul-07 20-Jul-07 23-Jul-07 24-Jul-07 25-Jul-07 26-Jul-07 27-Jul-07 30-Jul-07

14501. 08 14431. 06 14504. 57 14659. 51 14806. 51 14880. 24 14861. 89 14964. 12 15045. 73 15009. 88 14956. 45 14910. 62 15092. 04 15272. 72 15311. 22 15289. 82 15301. 17 15550. 13 15565. 55 15732. 2 15794. 92 15699. 33 15776. 31 15234. 57 15260.

497.8 -299.6 -470.5 -441.8 5837.1 200.7 410 824.8 1275 3179.3 889.3 702.1 363.5 699.6 2346.4 1660.1 946.4 1233.7 883.1 1223.1 1096 1285.6 -59.2 248.2 -1222.4

158.2 76 -9.5 -7.3 162.2 122.9 97.9 187.9 -201.6 122.1 -410.5 195.2 28.4 -190.1 -167.3 -331.7 117.1 295.8 -371.9 -103 -174.8 130 -316.5 -48.5 -486.8

4248.65 4267.4 4252.05 4259.4 4285.7 4263.95 4282 4318.3 4313.75 4357.55 4359.3 4353.95 4384.85 4419.4 4406.05 4387.15 4446.15 4504.55 4512.15 4496.75 4499.55 4562.1 4566.05 4619.35 4620.75

66

31-Jul-07 1-Aug-07 2-Aug-07 3-Aug-07 6-Aug-07 7-Aug-07 8-Aug-07 9-Aug-07 10-Aug-07 13-Aug-07 14-Aug-07 16-Aug-07 17-Aug-07 20-Aug-07 21-Aug-07 22-Aug-07 23-Aug-07 24-Aug-07 27-Aug-07 28-Aug-07 29-Aug-07 30-Aug-07 31-Aug-07 3-Sep-07 4-Sep-07

91 15550. 99 14935. 77 14985. 7 15138. 4 14903. 03 14932. 77 15307. 98 15100. 15 14868. 25 15017. 21 15000. 91 14358. 21 14141. 52 14427. 55 13989. 11 14248. 66 14163. 98 14424. 87 14842. 38 14919. 19 14992. 04 15121. 74
15318.6

-150 433.6 -982.7 -419 192.8 -1166.6 -123.6 190.2 382.6 -408.1 -520.2 -127.5 -2849.9 -3242.7 92.8 -9.8 -668.1 330.4 414.5 1201.8 365.6 -192.1 -664.5 677.3 527.7

51.6 0.9 251.6 523.1 186.3 -147.5 -7.5 256.8 47.9 -5.2 377.3 45.3 -169.8 23 151.5 239.2 878.3 152.3 -16.5 211.6 331.4 84.7 345.4 45.9 59.8

4588.7 4619.8 4445.2 4440.05 4528.85 4345.85 4356.35 4401.55 4339.5 4356.35 4462.1 4403.2 4333.35 4373.65 4370.2 4178.6 4108.05 4209.05 4074.9 4153.15 4114.95 4190.15 4302.6 4320.7 4359.3

15422. 05 15465.

67

5-Sep-07 6-Sep-07 7-Sep-07 10-Sep-07 11-Sep-07 12-Sep-07 13-Sep-07 14-Sep-07 17-Sep-07 18-Sep-07 19-Sep-07 20-Sep-07 21-Sep-07 24-Sep-07 25-Sep-07 26-Sep-07 27-Sep-07 28-Sep-07 1-Oct-07 3-Oct-07 4-Oct-07 5-Oct-07 8-Oct-07 9-Oct-07

4 15446. 15 15616. 31 15590. 42 15596. 83 15542. 77 15505. 36 15614. 44 15603. 8 15504. 43 15669. 12 16322. 75 16347. 95 16564. 23 16845. 83 16899. 54 16921. 39 17150. 56 17291. 1 17328. 62 17847. 04 17777. 14 17773. 36 17491. 39 18280. 24

630.4 410.4 623.1 580.9 -62.9 445.6 281.9 -46.6 1159.4 -267.4 -137.5 2484.5 1629.5 924.3 1284.4 1550.3 1004 2433.3 3493.3 2196 3161.5 575

726.4 463.6 142.5 98.8 67.4 45.2 -187.7 10.1 -179.3 73.3 80 -217.1 -203.6 -19 491.1 -234.6 128.7 -35.4 -430.5 -517.5 92.7 31.2 -127.8

4412.3 4464 4474.75 4479.25 4475.85 4518.6 4509.5 4507.85 4497.05 4496.85 4528.95 4518 4494.65 4546.2 4732.35 4747.55 4837.55 4932.2 4938.85 4940.5 5000.55 5021.35 5068.95 5210.8

3419.9

-102.1

68

10-Oct-07 11-Oct-07 12-Oct-07 15-Oct-07 16-Oct-07 17-Oct-07 18-Oct-07 19-Oct-07 22-Oct-07 23-Oct-07 24-Oct-07 25-Oct-07 26-Oct-07 29-Oct-07 30-Oct-07 31-Oct-07 1-Nov-07 2-Nov-07 5-Nov-07 6-Nov-07 7-Nov-07 8-Nov-07 9-Nov-07 12-Nov-07 13-Nov-07

18658. 25 18814. 07 18419. 04 19058. 67 19051. 86 18715. 82 17998. 39 17559. 98 17613. 99 18492. 84 18512. 91 18770. 89 19243. 17 19977. 67 19783. 51 19837. 99 19724. 35 19976. 23 19590. 78 19400. 67 19289. 83 19058. 93 18907. 6
18737.22

1951.1 1747.9 991 781 3858.5 1154.1 -1776.6 125.7 -3215.5 -1210.3 777 1861 213 -256.8 1047.4 -303.3 228 180.6 -761.4 -656.8 5.1 37.7

-532.1 -274.9 -340.9 -354.5 1 -723.8 111.4 -300.3 16.2 -265.5 -231.7 -326.3 286.8 337.4 735.3 831.4 421.1 -533.6 -11.2 -358 218 83.5 62.8 -158.9 -218.8

5208.65 5185.85 5327.25 5441.45 5524.85 5428.25 5670.4 5668.05 5559.3 5351 5215.3 5184 5473.7 5496.15 5568.95 5702.3 5905.9 5868.75 5900.65 5866.45 5932.4 5847.3 5786.5 5782.35 5698.75

-286.9 -820

19035. 48

69

14-Nov-07 15-Nov-07 16-Nov-07 19-Nov-07 20-Nov-07 21-Nov-07 22-Nov-07 23-Nov-07 26-Nov-07 27-Nov-07 28-Nov-07 29-Nov-07 30-Nov-07 3-Dec-07 4-Dec-07 5-Dec-07 6-Dec-07 7-Dec-07 10-Dec-07 11-Dec-07 12-Dec-07 13-Dec-07 14-Dec-07 17-Dec-07 18-Dec-07

19929. 06 19784. 89 19698. 36 19633. 36 19280. 8 18602. 62 18526. 32 18852. 87 19247. 54 19127. 73 18938. 87 19003. 26 19363. 19 19603. 41 19529. 5 19738. 07 19795. 87 19966 19930. 68 20290. 89 20375. 87 20104. 39 20030. 83 19261. 35 19079. 64

122.2 952 788.4 -79.1 -26.8 -1072.1 -2222.4 -843.9 -173.4 470.2 -263.7 -450 -977.6 1480.4 114.4 19.5 1081.3 822.4 5.2 300.6 689.9 59.8 1082.1 407.5 -1098.7

-139.4 -12.8 483 187.7 142.9 -255.5 138.2 -151.1 305.2 334.7 252.9 128.6 57.1 403.4 660.5 449.4 -25.7 -297.5 97.7 72.4 -292.1 308.1 37.1 -181.1 -218.9

5617.1 5695.4 5937.9 5912.1 5906.85 5907.65 5780.9 5561.05 5519.35 5608.6 5731.7 5698.15 5617.55 5634.6 5762.75 5865 5858.35 5940 5954.7 5974.3 5960.6 6097.25 6159.3 6058.1 6047.7

70

19-Dec-07 20-Dec-07 24-Dec-07 26-Dec-07 27-Dec-07 28-Dec-07 31-Dec-07 1-Jan-08 2-Jan-08 3-Jan-08 4-Jan-08 7-Jan-08 8-Jan-08 9-Jan-08 10-Jan-08 11-Jan-08 14-Jan-08 15-Jan-08 16-Jan-08 17-Jan-08 18-Jan-08 21-Jan-08 22-Jan-08 23-Jan-08 24-Jan-08

19091. 96 19162. 57 19854. 12 20192. 52 20216. 72 20206. 95 20286. 99 20300. 71 20465. 3 20345. 2 20686. 89 20812. 65 20873. 33 20869. 78 20582. 08 20827. 05 20728. 05 20251. 09 19868. 11 19700. 82 19013. 7 17605. 35 16729. 07 17594. 07 17221.

-2449.8 -1092.5 -515.8 167.4 2420.5 944 1140.9 797.9 142.3 -244.5 725.1 508.8 -80.9 1053.4 274.6 -630.8 113.7 174.4 225.8 -2279.6 -2186 -1356.1 -2425.7 -2256.2 -2499.9

-199 346.6 123.6 658.2 830.1 742.7 716.9 34.3 -178.4 183.5 295.2 490 616.6 30 12.5 -201.2 46.3 -274.2 -551.4 -519.5 -59.5 460.9 -271.2 2001.8 1195.1

5777 5742.3 5751.15 5766.5 5985.1 6070.75 6081.5 6079.7 6138.6 6144.35 6179.4 6178.55 6274.3 6279.1 6287.85 6272 6156.95 6200.1 6206.8 6074.25 5935.75 5913.2 5705.3 5208.8 4899.3

71

25-Jan-08 28-Jan-08 29-Jan-08 30-Jan-08 31-Jan-08 1-Feb-08 4-Feb-08 5-Feb-08 6-Feb-08 7-Feb-08 8-Feb-08 12-Feb-08 13-Feb-08 14-Feb-08 15-Feb-08 18-Feb-08 19-Feb-08 20-Feb-08 21-Feb-08 22-Feb-08 25-Feb-08 26-Feb-08 27-Feb-08 28-Feb-08

74 18361. 66 18152. 78 18091. 94 17758. 64 17648. 71 18242. 58 18660. 32 18663. 16 18139. 49 17526. 93 17464. 89 16608. 01 16949. 14 17766. 63 18115. 25 18048. 05 18075. 66 17617. 6 17734. 68 17349. 07 17650. 57 17806. 19 17825. 99 17824. 48

-1351.2 669.1 -1513.4 -285.1 -611.4 -3393.4 1034.3 3810.7 576.9 -528.2 -168.4 -1845.6 -115.1 349 -1183.1 1147.5 -115.9 1585.1 56.7 285.6 -453.8 738.5 85.4 396.4

874.4 350.1 221.2 368.8 -117.7 416.3 2134.5 100 818.9 -297.5 -212.2 -78.4 -293.5 -99.9 600.4 296.3 161.9 456.7 -326.8 -191.3 -226.8 -163.6 -140.5 525.9

5203.4 5033.45 5383.35 5274.1 5280.8 5167.6 5137.45 5317.25 5463.5 5483.9 5322.55 5133.25 5120.35 4838.25 4929.45 5202 5302.9 5276.9 5280.8 5154.45 5191.8 5110.75 5200.7 5270.05

72

Table2VariablesCalculatedforSensexandFIIinvestmentsfromthetable1datafor thecalculation of R2.

Table3VariablesCalculatedforSensexandMutualFund investmentsfromthetable1 data for thecalculation of R2.

Table4VariablesCalculatedforNiftyandFII investmentsfromthetable1dataforthe calculationof R2.

Table5VariablesCalculatedforNiftyandMutualFund investmentsfromthetable1data for thecalculation of R2.

73