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DISSERTATION REPORT

ON

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Pavan Kumar Puthraya


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Prof. S.P.Srinivasan
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ALLIANCE BUSINESS ACADEMY
BANGALORE ± 560 076

Batch: 2003-2005

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CERTIFICATE
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DECLARATION
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TABLE OF CONTENTS
Chapter No Topic Page No
c
cccccccc1c Theoretical background of the Study c *0c
cc 2c Design of the studyc *)c c
c 3c c Profilec c c
c c +0c "   c" c *1c
c c +)c  c"   c c 0+c
c cc ++c "  c  cc""c 0-c
c c +2c   c cc""c
 c 01c
c c +-c 3 cc""c )0c
c c +1c   c c% c c""c )+cc
c c +1c #"c4c"c )-c
c c +5c  c c c c   c )1c
c c +6c   c c )5c
c c +7c  c%c89  c(8. c +0c
c c +0*c ""c c"  c%c%c +-c
c c +00c c c"  c%c% c +7c
c 4c c Analysis of Data c c c
c c 20c 3 c c  c c 20c
c c 2)c c c ccc c 22c
c 5cc c  cc  c c   c -*c
c 6c c 3   c -+c
c 7c c   
c -2c
c 8c c  9 c --c
c c c c

c
LIST OF TABLES

TABLE NO TITLE PAGE NO

0c c c c
c$cc
 c c c c *6c

)c c c ""c  c c" c c c c c 0*c

+c c c p cc""cc c" c c c c 00c

2c c c c  c c $c c%c89  c c +*c

-c c ccccccccccc3
 cc:c3;cc c c c ++c

c
c
c

LIST OF GRAPHS

GRAPH NO TITLE PAGE NO

0c c c
c$cc
 c c c ccccccccc 6c

)c c ""c  c c" c c c c cccccccc 00c

+c c p cc""cc c" c c c cccccccc 0)c

2c c c  c c $c c%c89  c ccccccc +*c

-c c c$c c3;c
c c c ccccc cccc 21c c

-c c ""c" $c cc" 9c c c c cccccccc 25c

1c c c$c cc 9c c c c cccccccc 26c

5c c ""c$c cc$c c c c cccccccc 27c

c
c
EXECUTIVE SUMMARY
c
p c "  c %c %c   c  c c  c c  cc  c  c 
 c  c 065- c
 c c c c  c   c
c c cc076*c" c c$ c c
 c  ccc c"  c%c %c   c $ c c   cc c
 c 89  c c c " c  c 0766c  c  c   c  c c    c

c  c c""c$c c


 c077) c c  c c   c
 cc
 c"  c%c%ccc $c""cc$cc c cc cc c
c c c
c c c  c cc c cc  c
c
p c
cc   ccc<c
 c$  c c"  c
c$c$c
c c  c $ c =#c4c #c  c c $ c c  c  c c" c  c c
0777 c#c c c cc cc c ccc  c  c cp  c
 c "  c %c % c $  c $c  c  c c   c   c  c c c  c
 cc
 c c ccc c$c c c cc c077*cc
c
p c c$%ccc c c
cc"   c" c c cc8 c
  c  c c c    c   c  c  c ""c  c c 
 c c
 cp c c   c cc c

cc c c%c %c
 cc c c
c
p c cc ccc c c% c c c $cc""c ccp c $c
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c$ c ccc c
cc
c
p c 
 c   c c  c  c c  c c c    c c  c ""c  $c c c
  c9 cp c   c cc cc

 c c c 9c%c c
 c
 c c  c  c  c   c c   c  c c  c  c  c  > 9c  c

ccp c c c""cc
 c c c 9c c  c 
c%c c  c
 c c  > 9c c
cc
c
p cc   c c cc
c ccc c c%c%cccc
 c  c  c  c  c %c %c p c  c c  c %c %c c 
 c
 cc c c
 c

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1. BACKGROUND OF THE STUDY

p c   c %c c 9


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 c 
c c  c c  c c p c
"  c 
c %c c $ c c c  c  c    c c  c
c
c cc""?cp c  c c %c   c c c c %c
c  c c 
c    c c  c c c c  cc
$cc
cc
" c" c c   @ c c c
c %c c c$ c""?c  c
 c   c $ c c  c c c c c  c  
c "  c %c "   c  c
c c %cc c c   c?c c cc <c
c c %c
c" cc % c   cc  c
 c  @c c %c
 c    c c c c  c  c c  c  c  c  c c
 c cc c9 c
 c  c c  c
 c
ccc
cc
c  c c 9 c  c c  c c
c 
cc  c    c
Ac $ c c
cc cccc c cp c c%cc%cc
 c
cc""c c$c c" 9cc c" c""cc c c c c
 c"  c%c%c c c c

 c cc c%c%>
 c    c c c  c c  c c "c  c  c  c   c c
c   c  c (.c  c  c  c %c  c  c c c  c


 c  c  c %c % c c  c c  c c

 c  c
 ccc
c
For the study purpose the daily volatility in cash flows of FII¶s were analysed in
relation to the daily volatility in the National Stock Exchange of India benchmark
Index (NIFTY) from Jan.2001 to Dec.2004. This was done using Correlation analysis
and Regression Analysis.
c

0cc
c

2. DESIGN OF THE STUDY

2.1 Statement of the Problem:


p c %c %c c    c c  c c  c    c  c   c
 c ccccc
c c c%c%cp cc c c%cc c
 cc  c c c
 c c c%cp c9c  c
 c c
 c  c c %c  c  c 9c  c
 c  c  c c %cc  c  c
  ccc c  cc c c
cc   c c c c%c
p c c ccc  c c   cc""c c  c c c cc c

c%c9  cc"  c8c" cc

2.2 Objective:
pc c c
cc"   c" c$ c
c cc""c3 c$c c
  c c$ c c c%c%ccp c c c  c9
 cc  c
 c cc c""c c$ c  c$c c ccc c" 9 c
c
2.3 Scope of the Study:
p c
cc c ccc cc8ccp c c  c c c
c
c"   c" c c c8ccp c
cc c ccc cc$c
   c c c""c ccp c c   c c c c  c
 c c c cc cc c

cc c c%c%c  cc
 c c
c c c
 cc

2.4 RESEARCH METHODOLOGY

2.4.1 Type of research:c c c c3 >  c c

2.4.2 Sources of data:


$$$  c
c $$$   c
c $$$c
$$$    c

)cc
c

2.4.3 Research Instruments:


3 c
c   c
c #   > c c

2.4.4 Hypothesis 1
Bc/cCp ccc  c
cc""c3 c$cc c c%c%c'c
B0c/cCp cc c  c
cc""c3 c$cc c c%c%c'c

Hypothesis 2
Bc/cCp ccc  c
ccc$cc c c%c%c'c
B0c/cCp cc c  c
ccc$cc c c%c%c'

2.4.5 Plan of Analysis


c  c  c

 c  c "pDc  c c  c  c %c 89  c (8.c
  %c" 9c c cp cc  c c  c  %c c""cc  c " c


 c c c8c8cc c   c9  c c" c$ ccc5-Ecc c


%c   c  c $c c 7*Ec c c   c  c " c 

  c  c  c
8c p c c  9c c  c c  c c ""c  c $c $c  c c
cc c c  cccc  c c(.c cc""cc
 c ccc
p c c  c c  c  c c c c c  c c c c F c )**)c c
# )**2cp c
cc
 ccc c c
%c ccc c"  c
%c c  c
c 
 c  c   c 
 c  c  c   c
%c c" c%c   cc c  ccc
c
cc /cc
{  c# ccc cc%c
{ 3 c c  c cc
{ #   > ccc
c
c

+cc
c

c  c  c

c
c $c  c $c   c p c c #c ""c 3 c
$c c #c c  c Gc c$c   c""c3 c$c c c  
  c
 c  c " 9c (.c c  c 
  c  c c  c  c

c  c c
 c$c$c ccc
 c,ccc  c c >c
c
cc
""c3 c $c c c  
  c  c B$c" 9c cc c  c c
   c  c  c  c c  c 
  c  c c c c  c  c
  c c c   c  
  c  c c c c c c $c
  c$ cc""cc cccc
c
2.5 Definitions
Volatility
&c c c  c c  c  c c  c c
c   c c  c c c c 9c
 ccc"c$c ccc %cc c c c cc
cc"cc
%cc ccc  c c
c$cc cccc3  ccc
c%c$c cc
c c$cccccc cc
cc$ c% c ccc cc%c c cc%ccc3    c
 cc%cc%c c c ccccc$ c c c$ c c  c
cc
 c%c$c cc
c
Computing the Volatility
cp c  c c c c c c  c c c %c
c c p c
 c c $c $c c c c  c  c  
 c   c %c
c  c
 c cc
{ p cc 
 c c$c$c c  cc ccc  ccc
{ p c 9c  
 c c  c %c
c  c c  Ac  c c %c
c
 cH*cc c c c$ccc
{ p c c 
 cc c c
ccc%ccc c c ccc
cc
p c c c  c c  c  c c c c  c  c   c
c c$$cc c cc
c

2cc
c

 c  c c c c c  c


c c c   c c c "c
 c $c$c c( c
cc  .cc
cc c c
#
 c c  c $ c  c  c  c ( c
.c  c  c  c  c
( c c
.cp c c c c $ c c c
c c c c

 c c  c c c c$c c c c  c ccp cc c
 c
ccc c c
 c c$c c c c c c$c c
c

c c c ccc cc
c  c
c c c,c  cc   c
c M
;cc>c cc   c
c ;c,c"c c  c

Durbin ± Watson Statistic Analysis


p c #   c ,c  c c c  c  c c   c
c   c
$ c c$c 
  c c cc""c c  c ?c3 c$c
c
!c!c"cc"#"#!c$c
c

-cc
c

3. PROFILE

3.1 INSTITUTIONAL INVESTOR


c  >  %c
 cc  @ c cc c c c  c c  c
cc c c c cc
 c c c$c cc c
   c  c"   c c c c
c  c  c c c
 c c ccc% $  c c c cc
c cc

INSTITUTIONAL INVESTORS
1.c Foreign Institutional Investors
2.c Mutual Funds
3.c Financial Institutions
4.c Insurance Companies
5.c Banks
c
3.1.1 HISTORY FOREIGN PORTFOLIO INVESTMENT
"c $c  c  c   c  c 
c %c  c $c c c  c
  c c  c $c   c 
c %c p c   c %c c c c  c
c  c$cc $  cc c  c c  c c c$c c
$ c 
c %c # c  c  c %c c 9
c c c  c
9
c  c c$ccc
c
 c   c   c c $c c
c  c
  c  c    c c >
9  c  c c   c  c #  c  c 077* c  c   c @c
 c   c
 c  c  c c   c c  c  c  > c
 c  c %c p c  c c  c $ c c  c c  c >
 c  c c c%c
c
c
% c cc9c 
cc c c c  c% c c  c
c cc c%c c  /c

1cc
c

0 Domestic residents of developing countriesc $ c c  c  c  c



c c  c$ c  c c  c cc
c c
$ cc  cc c c<c  c%cp c c%
c c
c 
 c  c  c  c  c c  c c  c  c   c  c
  c
cp c  c c  c%ccc c9
c
 >c c  c c  c c    c  c c  c c c  c

c  c c c  c
) Managed Funds (closed-end country funds and mutual funds),c $ c
c
  c c  c c  c  c  >c  c  c  c c c c  c   c
%ccperformance-based tradingc

c
+ Foreign banks and brokerage firms c$ cc c
cc  c c
 c

c
2 Retail clients of Eurobondsc  c$ cc c c  c c%c
 c c
c  c c p c c  c  c  c  > c
 >%c
c  c c c  c%c
- Institutional Investorsc(  cc
  c  cc   c
 .c$ c cc
 cc @ cc9
c  cc c
c c%cc c c
 cc $ c

c c c%c c$  c c c
1 Non resident nationals of developing countries c$ c c cc
 c cc

c  cc cc
c

3.1.2 FOREIGN INVESTMENT


 c
c$c ccc c% $ cc cc c
 c cc
 c c  c  c $ c %c c $c c c c  c   c $ c  c c
 c  c 

c c 
c $c c
 c c
  cc c
 c c  @ c  c c c c $
c 
  c c  @ c

 c  c   c c  c  c  c c  c  c  c 077*c p c


 c c c   cc  c  c%ccc  c
cc$ c
cc  c c% c c c  ccc  cp c c
c$c
c 
 c  c $  c $c c c Hc 611c  c  c 077*c c  c c c
$ c c c  c c c c Hc ))6c  c  c )**+c 
  c   c +1Ec c  c

5cc
c

 c c c


 c c 
 c  c (= c 
 c   c
)**2.c" c c
c$c$c c c ccc c  %c c  c
 c  c c  c  c $c c  c  c 
c $ c  c #c
"  c(#".c$c c
c$ccc c9 cc
c
Table No 1
Net capital flows to developing countries
c
Year FDI Portfolio Equity Flows Debt
1970 ))c >>>>>c 12c
1980 -+c >>>>c 71c
1990 )20c 2-c -6c
2000 01*1c )1c >0c
2001 05-c 22c >0)c
2002 0250c 27c 5+c
2003 0+-)c 02+c 22+c

Graph No 1

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p c
c$c$c c  >9 cc075*cp cccc    c
 c076*c c c  c

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c c  c 8c  c  c c  c   c  c p  c  c

6cc
c

c $c $c 


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$ c  c c $c  c
c c 077*c " c  c  c
c $c c
 cc  c c c cc)**+c c c  c
c cc  c cc

cc c
 cc
c
Foreign capital flows to India
pc c    cc0770 c" c cc  c c  cc$ ccc
 c 9  c  c p c  c c c c 
c  c  c  c  c c

c$cc  c c c" c0770c" c cc  cc

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$$c   c  c  c  c  c c c   c " c  %c  c
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  c c  c @ c c%c  cc
c  cc
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c cc cc  c c"  c  c %c$ c
 c  c   c %c c  c c 
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$c c c cp cc c
c$c c cccHc0)0c  c c)**)>c
*+cc cHc50c  c  c077*>70cp cc c$cc  c ccHc
0*c  c c c   c I%c $ c  c  c   c  c  c c 
c $c
c $ c c   c c c  c " c c p c  > c  c 
c
$c ccc  cc  c
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c$cp ccc
 c c c $cc c c $c$c0-cc6++c c077*>70cc  c
221cc,11c c)**)>*+c
c
p c
c$c c  c cc c<cc c c  c c   c c
 c c    c 
c $c c " c c $c   c  c   c  c
#4=#c  c  c  c  c  c c   c c  c "   c
" c("".c
c
cc077) c c  > c"  c(".c cOverseas corporate bodiesc(G3.c
$c$cc %c
c  c c" cG c c
 c02 c077)c c
=  c c " c  c  c  c ""c   c  c " c $  c $c $c
c c  c c  c  c 89  c c c " c (8".c  c c c  c

7cc
c

 c077-c8c c c


  c
cc c%cc"" c c c  c c
""c c $c  c
c c c 9
c  c  c c 0776>77c $ c  c c
  c $c  c
c  c c  c  c  c
c c " c
c c c c c  c  c c 0776c  c  c 
 c c  c  c
  c c  c  c  c F
 c  c  c   @c  c G c  c  c
" c ccc c
c  cc ccHc))c  c
cc
$ c077)>7+c c)**)>*+cc$  ccccHc0)c  c
cc c c c
c c cc""cp c  c""c  c c" cc ccHc07c  c c
 c""c  c c" c ccc0*c
c cc cc%c
@ c
c c"  c%c%c
c
p c   c c""c c  c  cc c $ c  c c 
  c c c
"  c 
c %c  c 
 c 077)c p c  c  c c c c c c  c
c  c c  c  c ""c   c  c  c  c  c %c  c c 0+*c
 c c cc cc c)**2 c c225Ec  c  c)2c  c c c

  c
c c  c )**+c8 c   c c""c cc 00)c
 c $ c F c  c  c )**2c c 
c $ c 05c  c  c  c

  c
c c c p c  c   c c ""c  c  c c  c c
 c)**2cccc-*Ecc cc c  c$ c)22c  cc
 c cc)**+c
c
Table 2
""c  c c" c
Year Total portfolio Flows FII GDRs / ADRs Offshore Funds
1992-93 )22c 0c )2*c +c
1999-00 +*)1c )0+-c 516c 0)+c
2000-01 )51*c 0625c 6+0c 6)c
2001-02 )*)0c 0-*-c 255c +7c
2002-03 757c +55c 1**c )c

c
0*c
c

Graph No 2

× c  cc  ) c c 

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 ëë ëëëë ëëë ëëë


Table No 3
Table showing Trend OF FII activities in India

Year Purchases Sales Net Net


(c .c (c .c (c .c (Hc .c
2005 +7* +7+c +*) *12c 66 +)7c ) *0)c
2004 0 6-1 5)*c 0 215 *5*c +67 1-*c 6 -072*c
2003 722 0)*c 1+7 -+-c +*2 -6-c 1 -721*c
2002 212 57*c 2)6 276c +1 )7)c 5-)7c
2001 -05 57)c +61 -0*c 0+0 )62c ) 6*5+*c
2000 525 7*5c 162 )00c 1+ 175c 0 2102*c
1999 +12 +*+c )76 1+*c 1- 15)c 0 -+26*c
1998 0+6 776c 0-+ 575c >02 577c >++6c
1997 067 )1-c 0)5 07)c 1) *5+c 0 5215*c
1996 0-5 +7)c 27 +-1c 0*6 *+1c + *-6)*c
1995 11 1-7c )6 0))c +6 -+6c 0 0702*c
1994 7) 15)c )2 510c 15 70)c ) 0126*c
1993 )1 107c 116c )- 7-0c 6)5)c

c
00c
c

Graph No 3

×    


450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
-50,000 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005



c
3.1.3 Source of FII flow
p c  c c  c ""c $c c c p c ""c  c $ c 8"c c c c
 c c )6c  c (   c  c    c 
 c 
 c  c " c  c
 cc c .cc
0 > c   c cc cc20Ec
) !c  c  c)*Ecc
+  c8 
 c c  c  c05Ecc c""cc
2 p c  c))Ec c c cc
c
"c c $ c  cc c c c c c  c cc c c
 c  c  c  c  c  c c c  c
 c  c = c  c
  c   c $c  c  c   c   c  c  c c c
 c cc cJ ?cc c""c  c" c
 c   c
 c
cI 9   c3 c" cc3  c"  cc c c cc 
c

c
0)c
c

c B c ! c c %c c c   c  c  c  c  c c  c  c  c
 c   c  c   c %$ c c  c ""c c
c  c c c  c
c
 cc c  cc c$c c c""c$cc

Factors affecting FII flows


FII flows and stock returns: ""c$c
 c c c
 cc c%c9  c
c  c  c p c 8c c  c %c 9  c c  c  c c  c c  c 
 c
c $  c c c  c  c  c ""c $c  c c  c  c p c ""c  c  c
 c8cc c ?c%c 9  c c c c c
 c cp c

c  cc
c%cc   c c""c c

Country risk measures:c p c   c


c  c  c %c  c  c c  c  c
 c c  c  c$  cc c9
cc c c
c c
c
$cc" c  c cc%cccc c ccc#"c$c
cc

3.2 FOREIGN INSTITUTIONAL INVESTOR


p cc c"   c" cc c c8"cc /c
K c c    c   c c  
c  c " c $  c

cc %c
  c c" c c cc cccc   c
 cc
c
c   c $ c   c  c c c c c  c c
 c" cc  c c" c c  ccc >  c c ccc cc
 c"   c" Kc

3.2.1 SUB ACCOUNT


 > Kc   c  c     c   c c  
c  c " c  c
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c c  c  c
$ c  c   c c

c c c c  c " c c c  c "   c
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c
0+c
c

3.2.3 FOREIGN INVESTMENTS IN INDIAN CAPITAL MARKETScc


" ?c c c0770cc
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9 c   cc%c89  c c c3 cp c  cc  cc
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c( ccc@c  c$  c  cc7*Ecc.cc

c
02c
c

3.3 INVESTMENT STRUCTURE OF FII INVESTING

Investment Structure of FII

Typical Structure of FII investing


‘ Investment in securities
‘ |arning income from
dealings in securities
×   
‘ Investment decision taken
outside India and instructs  
GC & Broker
‘ |valuates investment
‘ Coordinates investments opportunities for FII
made in various jurisdictions 
 ‘ Advises FII to buy and
sell particular securities
‘ |nsures instructions are  

carried out through LC

‘ Opens and maintains foreign currency and


Rupee A/cs for the FII


 ‘ Opens and maintains Demat A/c for FII


 
‘ Interacts with Broker in accordance with
instructions received from GC/FII
‘ |nsures stocks are delivered on sale and
received on purchase
‘ Buys/sells securities on
behalf of FIIs as per
instructions received from
 
FII Page 8
PricewaterhouseCoopers 18 May 2005

c
0-c
c

3.4 REGULATION RELATING TO FII OPERATION

Regulations Regarding Portfolio Investments by Foreign Institutional Investors


(FIIs)
"  c c""cc c c8"c("".c   c077-c c  c
-().cc8c c)*ccc+ c)***c8"ccc c c
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cc c

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ccc  c"cc  c c
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c c8c  c c""cc 4c c c%c9  c


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c  c $ c c  c  %c
  cc
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 cc c 5*/+*c B$ c c c c
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c=  c c cp ccc  c""4 > c c
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cc c"  c
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c 4c  c 3 c c 

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c
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c c c 3
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4 c  c c

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c 4 c  c c  c
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c c8"ccccc <cc cc



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3.4.2 Eligibility Criteria to be fulfilled by the Applicant Seeking FII Registration
c
c  c1cc8"c( c"   c" .c   c077- c c
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c  /c


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p c 

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cc  c c  c  c c  c c
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p c 

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8c cc  ccccHc- *****c

Investments
 c
c c c  cc  cc %c  c c  c
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c
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%c  c  c c
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{  c c
c c c%c(cc .c
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cc c c cc c
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   c 0775c ""c  c  c  > c c c
c c c  c  c  c
c c  %c c  c  c c c  c  c   c  c 

c
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Investment limits:
{ c ""c c c  > c  c c
c 0*Ec c
c
c  c 
c c  c

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{ p cc   c c cc c  c 
c c  c   c
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c
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{ B$ c  c  c 


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c c 
c   c  c  c
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cc27Ecc c
c
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cp c
cc)2Ec4c27Ecc9 c cc  c c""c cc
{ "cc  c c c c ccc)2Ecc c  c  cc
c ""c  c  c c   c  c  c   c  c c   c


c
c "  c c  c   c
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 c  ccc9 cc
c
3.4.3 Portfolio Investment by Foreign Institutional Investors
c  c $ c c 
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 cc

cc Mc
c $ cp cc cc" c
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c  cc )cc+Ec $ c c c  c  c c
c p c  c c c   c  c 6c c 0*Ec $ c c c
c c $c c c
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c c$
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ccc

cp c

ccc cc c $cc c  c c$ c c  c
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3.4.4 Taxation and Repatriation:
p c9 c c

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c
Nature of Income c Tax Rate c
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c  cc 0*Ecc
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c  cc +*Ecc
# c" cc cc
" c" cc )*Ecc

Long term capital gain:c3


c  c ccc c ccc
ccc  c
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Short term capital gain:c3
c  c ccc c ccc
ccc  c
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c

c
07c
c

I c p9c 3  c c c c  c ""c c c  c c  c  c "  c
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c  c cc c cc c
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c  c  c c  c  c c  c c
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p c9
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Ac=  c Ac c cc c c c
c
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c   c c
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cc c%cc$c <c
cc  c c )2c
c  c c c c 
cc cc  c c c c
""c c c c
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ccc  c% c c c c


  c cc c cc
c  c   c c c c
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 c$ cc c <ccc cc-c
c c
c c  c 
c c  c

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c $c c  c c
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c ccc   c""c$cc
  c"c cG3c  c c$c c  cG c c  c  c
= c#
c
c c8 c3  c c
p cc
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c" c c c c $c c c c  c c  c c   c c""c c c
%> c
c
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cc  c  cc c""c
c

c
)*c
c

3.5 CATEGORIES OF FIIS WHO ARE AUTHORISED TO INVEST IN


PORTFOLIO OF SECURITIES IN INDIA

Category -1: The applicant should belong to any of the following categories:

{ Pension Funds

{ Mutual Funds: c c c cc cccc$cc



cc  c   c c c c8 c  c

c c
 c  cccc c c cc c c c ccc cp c
 Mc cc c(&.cc c cc8 c   c c
c
c cc c c <cc c c

 

{ Investment Trust:c c "  c  c c 


 c  c  c  c  c  c c
 c 
 c p c
c  Mc  c  c  c  c c c

 c c   cc  c  c c c cc $c c c 
 c
  c c

c  c
c  c  c  c p c   c  c
 c c c
 c cc ccc
 c c  >9 c
c "  c  c c c  c %c 9  c %c  c
c

 c p c  c
c c c $c c  c  c  c c  c
 c
c c c c  c c" c  c c c  c cc
c c c  c c c  c (c
 .c c &c ( c c  .c p c
  c  c  c  c
 c
c 
c   c  c c  c
$ cc cc$cc

{ Insurance or reinsurance companies: "   c


 cc cc/
Ic    c 
  c $ c c c     c  c  c
  c

 cc
 >cc  c   c
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cc   cc
c "   c 
 c c c  c c c  c "  c c c

 cp ccccc c  cc c  c
 c
c  cc  c
 cc$ c c c
  c$ c
%  c ($ c c c c c $ c
.c $ c %c    c

 c

c
)0c
c

Reinsurance 
 c c    c 
 c  c c
c c  c
   c 
  c$ c cc c c%c  c
c c
cc ccp c   c%cc c cc$cc c

  c$ c cc
c
{ Endowment Funds/c c
c c
c cc c   c

{ University Funds

{ Foundations or Charitable Trusts or Charitable Societies who propose to


invest on their own behalf.
c
Category -2: FIIs who propose to invest their proprietary funds or on behalf of
"broad based" funds or on ofcforeign corporates and individuals.

{ Asset Management Companies:c c  c  c   @ c  c


c
 cc c

c c
c  cc c c <c

{ Nominee Companies

{ Institutional Portfolio Managers

{ Trustees

{ Power of Attorney Holders

{ Bank
c
c
c
c

c
))c
c

3.6 MAURITIUS ROUTE TAKEN BY FIIS

Double Taxation Avoidance Agreements (DTAA)


p c # c p9c  c   c (#p.c c  c c   c
 c c $ c$c  c c c c $ c" c c  c cc
p c c <ccc
c cc cc c  c $ c$c
 c c c c9 c
c
The advantages of DTAA are as under,
{ I$c  cp9cc
{ 3
c89
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{   cp9c3cc
{ p9c
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c
" c c  c  c c #pc   c $ c   c  c # c p9 c
 cpcc  c c c c"" c"  c
c  c c c
 c
cc
 c9c c c c""cc  c c c   ccc
 c
 c9c c" cc cc c  c c
c c9>  c"" cc
cKKc  c c c$ c

ccc  c c  c  c


"cc $cc c  cc  cccc c c c
 cc c c
"  c%c%c c c  c cc cc
c
c
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c c8  c c c  c
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c
  'c "c c c  c  c  c 
c 
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9
 c c  c  c c c c    c  c c c   c c   c
%c
c
p c  c ?c ccc c c"   c" c("".c$ c cc
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$ c  c$ccc  c9ccc c  c9  c

c
)+c
c

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c9c c" cc c c
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cc  c c c c c c"  c%c
%cc c c" Ac c""c
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cc cc  cc$  c c
. c c cc
c  c9cc+*Ec

c cc c%c c  c cc


c  cc cc0*Ec
c  c9c

c c  c
cp  c cc c c
c9 c c  c

c c c""?c
cc%c%cc

p c# cp9 cc c" c c$ cc cc cc c9 c
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c c"  c c c c
9 c c $ c  c  c "  c  c $c c c 9c  c c   c c  c c
c  c9c  c " c  c c 
c
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c  c 9c   c  c c  c " c B$ c c  c c c  c c   c
c  c  c c  c p c  c 
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  Ac   cc c c c c c c
c  c9c"c c c9 c
c$ ccc  c c c""c$c cc
c
c  c9c c" c
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c c""Ac c
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p c""c ccc c c  c ccc


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c  c9cG cc c
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""c c cc c c c cc   ccc cCGc3
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c
p c c c 9c   c c c   c $ c  c   c c c c  c c
  cc cc c cp c c<c cc c
cc c c$c c
 c cc c"  c%c9  c" ccc c cc$c c   c
 cc   c c cc
c  c9cc+*Ecc  c cc
c
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c  c9 c c c c c""c
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c
)2c
c

3.7 FOREIGN DIRECT INVESTMENTS AND PORTFOLIO


INVESTMENT

Foreign Direct Investment


‰ c 
 c c  c  c   c   c  c  c c ( $c c 9 .c
c c  c  c c  c
c cccc
cc c    c
 cc c  ccc
‰ #"c c c   c   c
 c 
 c  c c  c c  c $c
 c $ cc > c  c $ c c c c c c
 c
 c
  cc c   cc c c
‰ 89c c
 
c$  c c cc ccc cc c >
 cc(3 cc.cc
‰ #c c c   c cc c cc$  
c$  cc
  c c  c cc$c
c
Portfolio Investment
‰ cc c% c   c 4c c  c   c cc c c
   cc ccc
‰  c   c cc c
c
p c c   c $ c #"c  c  c  c $c #"c c
 c c  c
 c  cc c   c cc c  c
c c   c
" c  c""cccG c c cc c cc  c  cccc
 c c c    c 
c c 
 c  c  c %c  c c c  c
c c cc$>
c%c% c c  c cc c
c
p ccccccc c   c c("".cc c c
c
%cc c  c
c ccc
 c c   cccc%c
c  c ""c  c  c  c "  c %c %c  c  c  c 89c c  c

cc
c

c
)-c
c

c #" c $ c  c  c  c 9c c c c  c 8 c  c c 
 c c
#"c  c

 c
 c cc c cp cc  c  c c
c c c   c c c c  c ccp cc c c  c c
c
 c  cc   c  % ccc$  c%c c c89ccc



3.8 RECENT TRENDS IN FOREIGN INVESTMENT


""c  $c c " c   c  c c 9>  c
c c c )**2c c 
c )**-c c
9c c H6c  c #"c $c c  c c   c  c  c c  c  c &c
 c   c c c  c  c c c c " c c  c c   c
c
   c " c   c c  c  c c #"c B$ c  c c  c
 c  c  c  c  c  c ""c c c c  c c c  c  c
 c #" c c  c c c  c c  c  c " c  c c  c  c c
 c$cc""c$ c c c c c$ c c   c c
%ccc"" c$ c c$ c
c$c c   ccc#"cc
c
#"c c
 c c  c  c  c c  c   c  c c  c
  c 
c  c    c " c   c ""c c c G c  c c c c
 c c   c   c c c c  c c c    c 
c c

 c  c c %c  c c c  c c c cc $>
c %c % c
 c   c c c  c " c  c $>
c %c c 8 
 c c
   c  c  c c ""c  c c 
c $c c  c " c   c  c  c  c c
 c #"c c  c   c c c  c   c $c B$ c c  c
 c c c $ c c   c  c
c  c c  c c  c
c  $c
ccc

c
)1c
c

3.9 MUTUAL FUNDS

c   c  c c c  c  c


c  c  c c c  c c  c $ c  c c
 c   c c p c  c  c c c   c  c  c 
c %c
   c   c c  c    c  c  c  c p c  c  c   c
 c   c  c  c 
c 

 c c c  c c c c c  c


 c c  c  c c c $ c c  c p c c   c  c c  c c
  c   c c  c  c  c c c c  c 

 c c  c  c c


 c
 c  c %cc cccc$ccp c$c
 c $c  c c  c $% c c c   c /c
cccc

c
Mutual Fund Operation Flow Chart
c
p c  c  c c c   c  c c  c  c   c  c  c 
c c
 c p c  c  c c  c c    c c  c %c     c

  c
 c  c  Mc c  <c p c  c  c   c  c
  c  c  c 
c 

 c c c  c  c c  c c c c


c c

 cc c  cc c$ c c cp cc  c cc c
c   c   c c  c  c  c c c c  c 

 c c  c  c c


 c
 c  c %cc cccc$ccc

c
)5c
c

3.9.1 Types of mutual funds


By Structure c
Open-ended schemesc c 
 c c  
 c  c $ c c p c c c c c
9c cD c c c cc c cc c&cc
cc c  c
 cc
c
Close-ended schemesc  c c   c  c  c   c  c  c
c c  c
 c c c c cc c cc c c c c%c9  c$ c c
ccp c cc
c c
c c  cc$  cc  c)cc
0-ccp cc  cccc cc c&c

By investments objective

Growth/Equity Funds
8 c c( c cc $ c .ccc
c
c $ c c  c
 c  c  c c   c 
 c #
  c  c  c  ?c  < c  c  c
 c c  c  > 
c   @ c c c  c $c  c  c  c
c c c c c c c c c c  cc
c  c $ cc

cc  c c%c  c  c c  c c c  c cc c   c c
 c cc >c

c c cc cccccc

Debt/Income Funds
p cc c  c c  c  ccc %c c
 cc c   c  c
 c c c cc cc cc c c pc
c $ c c c
  c c c  c c c9c c c  cc   c
c
    c   c c( .c c  c %c   cB c cc
cc  c c cc ccc c9
c  cc c c
$ c c$c
c
Balanced Funds
c c c  c c ccc   cc cc c
ccc 9 cc
 c c c   cp c  c c cc c$ c%cc $c c

c
)6c
c


c c c c  c$ c  cc$c%c p c  c c  c
 cc c c
cccc c ccc cc c  c c

c c c% c$ c c


c c
 cc
c

 c
c
Money market or liquid funds
c  c 

 c  c c  %c 


c  c  c c c
c   c
  c
c
 c c c  c cc  c  %c c  c
 c  c  c c  c %c   c  c  c   c  c  c J ?c c   c c
 c  c c c 
c  c c

c   c  c  c
 c  c  cc
cc c  c c cc c  cp cc



cc
c c  c c$ c $ cc
%c c 
 c  c
 cc ccc c
c

Gilt Fundscc
=c  c c  c   c $  c  c  c  c =  c  c  c  c c
@cc%cB$ccc c" cc%c

Marginal Equity Funds


p cc  c $  c c
  c  ccc5-Ec c  c   c
:c c  c c cp c c$c c c c cc# c$ c c c
c c
c
Sectoral fundsc p c c 
c   c  c  c  c  c %c  c c  c c
 ccc c cBc c
cc
cc
cc c%c
 cc
 cp c
cc cccc c c$ c ccc

c c  c c   c c %c  c   c c  c
 c c p  c c 3=c  c
$ c c c
 c c  cc c  c c
c
c
c
c
c

c
)7c
c

Table No 4
p c $ cc  c c $c c%c89  c

£! -c  "!c #!c !c  !!c






.c c .c c .c c
#$  ! %& &  
&   '
& && & &
&&   '
& && & '&
&   '
c
c
Graph No 4
  
m !    #( %

* ***

*
    
** ** ** **, #   ! % **+
'* ***

' * ***

'* ***

',* ***

'+* ***

')* ***
£ 

c
c
p c  c cc c
 c   c c%c%c
 c8 c  cc
ccc c%c9   c cc c    c  c c c c
c" c
cc cc cc   c c  c c  c
cc c
 c
cc c  c cc   c c c c c   c c%c
 cccc c c <cc c c

c
+*c
c

3.10 NATIONAL STOCK EXCHANGE

The Organisation
p c  c %c 89  c c " c Ic c  c  c  c 
c c  c B c
$c c =
c  c8   c c $c %c89   c $  c c

 ccc c%c89  c c  c   c(".cc


cc
c  c c c c  c  c  c  c  c  c c  c  c
   c 8c $c
c c  c   c "   c c  c  c c
 c =  c c " c  c $c  
c  c  c 077)c c c 9>
 c

 c %c c%c9  c c c cc
c

G c c   c c c %c 9  c c  c  c 3 c (  .c  c
07-1c c
c077+ c8c c
 c c c c# c%c(#.c
  c cF c0772cp c3
c%c(8 .c  c c 
 c c
 c0772c c
 c c#c  c c cF c)***c
c
S&P CNX Nifty
p c :c
9c  c c  c > c Standard & Poor'sc   c "  c
c:c$ c cc
 c 9c c c$ c c:c-**c 9 c$  cc
 c   c c  c  c  9c  c  c c  c  9c   c %c  c  c
$cc

  c :c c c " c c %c c %c   c  c  c
 c  c :c 3;c
cc

cc c cp c $c c   c c:c3;c ccc


 c c c cKS&P CNX NiftyKcc
c

CNX  c c CRISIL NSE Indicesc 3;c   c  c   c c   c c
c  c  c c  c  c
 c c 8c  c 3""Ic p  c M3Mc  c c
3""I cMMc cc8c c;c cc89  cc" 9cc

Working Of S&P CNX Nifty


:c 3;c c c c
 c c  c  c c  c   c $c
9
 cc c c c  c c:c3;c c  9cp c c c c $%c
c% c
/cc

c
+0c
c

(.cp c@cc c%cc-*c


( .c%c cc c:c3;cc c c c c cN
cMc c
(.cp c c-*c%c cc c c c c c 9cc
c
Features of NSE Nifty
Diversification:c:c3;cccccc 9 c c cc
%c   c p c $>>%c c c :c 3;c c c  c   c  c
 c  c% ccccc
c  c cc   c cc
c%cc
c
Liquidity:c Gc  c c(G c 0776cc G c 0777. c c c  c  c 8c
cc%c$c+-c c  cc ccc0*-Ecp cN cMc
c  c c  c  cc ccc c%c
@ ccc
c
Hedging effectiveness:cp c c %c c c   c $c c $c $ c c  c

c  c c c%c c c 8c c c  c c $ c
c

c c" cc


cc c ccc 9cp c$cc
c c   c
 cc  c$c c
cc
c
Governance:ccc  c cc
 ccc""I cc
 c
c c8c
 c 3""Ic $ c  c  c c  c:cMc p c c c  >c
  c   c 
 c  c c c c c ""I c  c " 9c c
3 c  c  c " 9c    c  c :c 3;c c c  c
 c  c
 c 
 c  c   c  9c  c 
c
  c c p c  c c  c   c   c c "  c    c c c
$ c 
 c
 c c  9c  c  c  9c    c :c 3;c c c
ccc 
 cc c /c
(.c  c  9c c c  c c c  c c 9  c $ c 
c
c   c
 cc
( .cc:c 3;c c c c  c %c 
 c c  c    c (
 c  c
c  9.ccc  cc c c  c%c
ccc cc

c
+)c
c

(.cc:c 3;c c   c  c  c  c  c

 c c %c

 c c c$%c %c$  cc 
c c%ccc c
:c 3;c c  c c  c  c  c c
 c $ c c  c  c >
c  /c  c :c 3;c c  c :c 3;c c pc   c " 9c
c c  c c F c 077*c  $c :c 3;c c c %c c c
 c c c cc
c   /c8 c3""Ic c:c

Table NO 5
Composition of S&P CNX Nifty
Sl no Company name Industry
0c cIc 8c 
 c
)c c3 c3
 cIc 3 c c c
 c
+c <<c cIc   c>c)c c+c$ c
2c  cBc8cIc 8c 
 c
-c  c c3
 cIc  c
1c  cp>&  cIc p  c>cc
5c 3
cIc   c
6c 3 >c(" .cIc  cc
7c # c" cIc  cc
0*c #cMcI cIc   c
00c =c( .cIc =c
0)c =9 % c  cIc   c
0+c =c"  cIc 3 c c c
 c
02c = <c <c3 cIc 3 c c c
 c
0-c B3Icp  cIc 3
c>c$c
01c B#3c %cIc  %c
05c BcB ccIc   c>c)c c+c$ c
06c B c"  cIc    c
07c B   cIcIc #c
)*c B   c c3
 cIc  c
)0c B  c#
 c  c   c>c   c

c
++c
c

3
 cIc
))c "p3cIc 3 c
)+c "3"3"c %cIc  %c
)2c "  c c3
 c
 c
Ic
)-c " cp  cIc 3
c,c$c
)1c I c:cp cIc 8   c
)5c    cp
 c cIc p  c>cc
)6c   c:c  cIc   c>c2c$ c
)7c  c cIc   c>c2c$ c
+*c  c   c3cIc    c
+0c Gc:c c=c3
 cIc Gc9
 4
  c
+)c G c %cGc3c  %c
++c  < c c %c  %c
+2c  9cI cIc   c
+-c  c8  cIc $c
+1c  c"  cIc  c
+5c c3
ccIc 3
c,c$c
+6c  

 c3
 cGc" cIc  

 c
+7c c %cGc" c  %c
2*c c  cGc" cIc c cc
 c
20c  c  c"  cIc   c
2)c pc3 cIc 3 c,c   c
2+c pc3   ccIc 3
c,c$c
22c pc" c:cc3cIc c cc
 c
2-c pccIc   c>c2c$ c
21c pc$c3cIc $c
25c pcpcIc pc cc
26c & c  c cIc p  c>cc
27c 
cIc 3
c,c$c
-*c OcpcIc c:c   c
c

c
+2c
c

3.11 FII and Indian Stock Market

 c  c  c c   c  c c $c c c c  c  c c  c


  c c  c    c  c ("". c $ c $c 
  c c c  c

 ccc  ccc722c c cc06-*c c


c c)**+c c)**2c
p c c
c$ cc
%ccc c
 ccc0-1c ccc %cc
0771c  c c   c c ""c c < c H5-+c  c  c )**)c " c   c  c   c ""c
 c c"  c%c c cc$cc cc c$c  cc >c
 c c c 9c c
cc
c
p c   c %c c ""c    c  c H+*+c  c c  c  c c )**2 c
 c c < c 6c
c  c c  c H+6+1c  c c %c 
 c  c  c
 c %c 89  c B$ c ""c   c $c   c c  c   c
  c c ""c c H+005c  c $ c 
c  c # c )**2c  c c
 c +62c
c  c c  c   c   c c H6+0+c  c  c  c %c   c
 c
 c$ cc c""c cc)76c
c cc  cc 
  c
 c c  cc  c c c c cc c%  c c c"  c

 c cc c c c >)**+ c c c ccc+*c

c  c c c  c  c" Mc


c -*c 
 c>c c c -*c" c   c c
c$ c< c06c
c c c c
 cc c cc)**0c c))c
c c
 c# c)**)cc
c
c c cc cc c ccF c)**2 c""c c c c)01c

c cc c c 9c


 c   cc$c c c> c  c
c  c c  c c  c  c  c c c c c
 c
  c c  c    c c  c""c  ccc c  c +1c
c
 c" cc cc 9c
  c""c  cc> c c9c2*c
c
 cc ccc
c

c
+-c
c

= c  c
 c c "" c  c c  c   c  c
c  c  c c
  c"  c%c%cc% $ cc c $c c $c c c c c
 c c $c 
 c $ c  c c c c p  c   c  c c c
  c2 5**c
 cc c c%c9   c c8c 9c 
c< c+*c

  c  c  c $ c  c c  c c  c c %c c p c
 $ c$ cc c c ccc""cc$ c c9 c c c
   c c   c c  c  cc   c $  c  c >%c   c cc
$c c""c$  c% c c  c cc
c
p c cc"  c%c%c  cc  c cccc c c
" cc  cc c c c  c c""c cc 
c
c  cc$ c c
 c c   c    c   c   c c  c  c c c   c c  c
 c c
c  c $ c c
c   c c c c c  c
$  c  c  c    c c $ c c c c c c  c ""c
 c c  c %c  c
cc c9c 
c c c
cc
c
  cc c$  c""cccc c%c c9
 ccc
c c
 c  c c c  c  c  c  $c c  c 
c  c  c  c  c


 c c  c 
c 6  6 c  c c (.c p c  c  c   c  c  c
 c9   c$  c
cccc c c c c cccc
  c  c   c   c  c c  c   c  c   c 
c  c
$ c
cc 
cc$  c c c   cc
c
p  c c $ c c c c""cc c
$c c$c c $ cc $c
% c   c
 c  ccc
  c c%c
c c  c
 c 


c  c c 9c p c 
c  
 c c  c % c c c c
 c  c$ c  c
cc  c c ccc
c
  c  c c % c c 
 c c 
c c  
c %c  c

cc  c  c
cp  cc  c c c c89  cc
c " c (8".c c 

c c c  c  $> c c c  c >> c

c
+1c
c

  c  c c  c c  c  c %c   c c 05 c )**2 c $  c  c
 9ccc
c ccc$cc2-*-cc
c
p c c $c c c  c % c   c   c  c  c c  c %c
%c 
c Ac c c  c c   c $  c c %c c  c  c c
c c  c c c cp cc c c""c c  c  c c" cc
  cc ccp c
 cc c  c  cc c c c c c
 c   c $  c c c  c
 c c  c  c %c c 
 c  c
 > c %c$ c c c$c"ccc c 9
c c""c$ c%c  c
 c c   c c $c c  c  c   c c    c c c
 
c  c %c
cp c  cc c $  c  c %c  c
c
<   c$  cc
cc c c ccc  cc c%c"  c c
cc c c c%cc  cp cc c  c cc
 c

cc c c c  c  c c  c  cp c c c
c c c c cF c$c cc c c ccc$ cc""c   c
c
 c c9
 cc c ccc c ccc
c
p c
cc c%ccc  c  c  c  c c c
 c 
 c  c  c %c  c c <c 
  c $ c  c  c
c c  %c$cc
cc cc c c % c c 
c c c
%c cc c   cc
cc c  % ccc
c
 cc ccc
 c   c c  c  c $cc""c
c
c c% cc c
cc c c cc c
c ccc
  c
 c  c   c  c  c  c 
c    c  c  c c   c c p c c
$cc  c   c c   cc $$c c cc c c  c c  c
 c" Mccc cc  c c  cc
c
p  c cc  c
c c" Mc c%c$ c   ccccc
  c c c  c 
c c c cc > cc c" cp cc

 cc c  cc$  c" c c""c  ccc c c  c
 c c  c  c c
 c  c c  
 c  c  c  c   %c c  c

c
+5c
c

 $c c cc  > c c c  cc9


cc$c c
"  c p  >  c  c $c c c c  c ""c $c c   c
 c 9  c 9
  c  c c   c 
c 
c   c $c    c
 cccc c c%c cc
>9 c c c  c$cc c
c c  c
c  c  9 c  c   c  c c   c c  c c 
c
c  c c

c $ c  c   c  c  c
 c  9
 c  c c

c c  c c c  c
cc
c
" c  c    c  c c 
 c c  c
c %c c c  c $c c   c
  c c $c c ""c   c  c " Mc %c p c $ c 
c  c
  c c c ccc$ cc$ccc cc c cc  c
$ c   cc c   c
 cc
c9c   c c c  c9c c
 c  c
 c   c $ c   c c  c  c c $  c c  c c

  c c  c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c

c
+6c
c

3.12 MUTUAL FUNDS AND INDIAN STOCK MARKET

p c  c cc   c c(.c c c c %cc c cc


c  c

 c  c c%c % c c  c c  cc


 c c ccc
c
" c )**+ c c  c  c
 c  c  c  c  c c c   c ( c
 c
 c .c  c  c  c %c  c  c c   c $c $ c c c % c

c c ""c $c pc c  c )**+ c ""c c c c  c   c c c
)+ ***c c$ cc c c
c c cc0 0**cc cc c cc
c
MFs account for significant volumes/c  c  c $c c $ c  c $c  c c
 c  c $ c""c   c c  c c cc  >$c $c $ cc c
 c  c  c c c
 c c   c c   c  c c c    c  c
  c c c  c
 c c c c $ c  c   c  c c  c
p c cccc$ccc c  c cc"c c
c cc
 c
 cccccc c
 c cc c"" cccc cc( c c
c .cc ccc  c
 cc c  c c c c
 cc
c
Purchases gather steam/cp%c c  c c c
 c c cc  c" c
)**0 c c
 c c c  c c c c   c )+c
c  c c  c  c c

 c c c  c ""c " c )**) c  c



 c  c c ++c
c  c " c )**+ c
  c ""c c  
c c
c  c cc    c c c 

c c c


c
c  c
 c c
 c  c c c +*c
c  c c  c ""c

  c c c c c cc  c  cc)**+cc


c
p c

cc c cc cc c  ccc



 c c
 c c%c c  c c  cc  c
 c cc
c
cc c c c c c%cc

c
+7c
c

"cc c cc  c cc


 c c c   c c c c
 c c  c cc cc cc
c
p cc c c  c  c
cc c c  cc c""c" c
 c c  c c  c c $ cc
 c c c""c cc
c c
 c  cc c
%cp cc cc c

cc
c cc c$  c c %c
c cc  cc c
 c c""c ccc c c
  c$  cc9c
 ccc ccc

A healthy trend/c  c  c  c (c   c c  .c c c c  c
 c  c c  c "  c  c %c c   c c  $c  c c  c
c  c % c c c c  
cc  c  c  c  c  c c  ccc %c

c  c  c c   c = c  c c <c


 c c   c  c  c
c c  ccc 9cccc2*** c ccc$c  ccc c
 c  c cc%cc c cc
c c c  c  c c c

 c c c c  c  c $c  c  c c  c c % c c c
  c c c c c%c  c cc c)***cc
c
c cc cc $c c c

cc c  ccc


 c
c
c% c
c c%c c c c
c   %cc cc c
 cc
c
 cc cc cc c c
 c c c c c c c
 c c c   c c c cc cc
c c c c  c$  c
 c%cc c c
$ cc
c
 c  c  c  c 
c   c  c  c 9
 c  c c  c
 cc c  cc$ c c  c

c
c
c

c
2*c
c

4.c ANALYSIS OF DATA


4.1 Correlation and Regression Analysis

 !#
c × c # c c
×c×# c
c
× c # c ! c !#c  #--% '&#--%
c   
c ! c !#c #--%  
c   

×c×# c ! c !#c '&#--%  
c   
-- .

       c

Inference:

{ p c c $ cc c""cc  cp c  c c c""c $c
   ccc  c9 c c ccc
{ p c c $ cc cc$cc c*+7cp c c ccc c
   c c c  c c$c
{ p c ""c  $c  c c $c c  c c  c  c  c c
  cp c cc c>*0+)c
{ p c cc cc77Ec  cc
{ p c  c c   c  c c  c  c  c c 5-7c p c
  c  c  c c  c
c c  c c ""c  c  $c  c c
c$cc

c
20c
c

Model Summary(c)
R Adjusted R Std. Error of the Durbin-
Model R
Square Square Estimate Watson
0c +21(.c 0)*c 006c +)-*6-1c c
)c +-1( .c 0)5c 0)-c +)+72+2c 07)c
cc/c(3  . c""c" $c
cc/c(3  . c""c" $ cc$c
3cc#
  c& /cc

Inference: c
{ p c #   c ,c  c c c  c  c c c   c
c
  c $ c  c $c  
  c  c  c c ""c  c   c
 ?c 3 c $c "c  c  c  c c 
c  c  c  c  c  c
 
  c cc
c
{ p c c  c  c c  c ""c  $c c *006c p c  c  c ""c 9
 c  c
006Ecc cc ccc cc c cc cc$cc*0)-c
 c cc$c9
 c0)-Ecc c cc ccc
c
{  c c c c  c c c  c cc c 9
 c c c  c
  c # c c  c c c  c
c c p c c c c
8c  c  c c c ""c c +)-*7c $ c  c c c c c
+)+72c
c
c
c
c
c
c
c

c
2)c
c

c
!"!c
c
Un standardized Coefficients Standardized Coefficients

Model B Std. Error Beta


1 (Constant) 0)776**c 0)562c c
FII Inflow -0+c *-0c +21c
2 (Constant) 0+**6)+c 0)521c c
FII Inflow -+*c *-0c +-5c
MF Flow -)0c )*5c *61c

Inference:

"
cc""c$ccc2cc  c ccc$c

cc""c $P*+-5c

ccc $P**61c

p ccccc0.357c c c
= 4.15
0.086

p c   cc""ccc  cc


cc c   cc c  c c$c
 c c" 9cp c c c  c cc

 c c c""c

c
2+c
c

4.2 Asset allocation Analysis of selected Mutual Funds Schemes

Name of MF Scheme Asset allocation % of Non-


Equity Money Index stocks in
(%) Equity
Market %)
 cc c
c 60-+c 0625c 60Ec
  c
  cc cc
c 6510cc 0)+0c 2*Ec
  c
 cc cc 675-c 0*)-c 26Ec
c
 c c  cc 757)cc )*6c +1Ec
ccc
cc 7706c *6)c 22Ec
c  ccc
c 7-27c 2-0c 25Ec
  c
 ccc 7)+1c 512c 72Ec
 cc
c  c
 c  cc  c 7606c 06)c 5+Ec
c ccc 7-55c 2)+c +-Ec
  ccc c
c 72+c -5c 15Ec
  c
c c cc 7-55c 2)+c 66Ec
c  cc ccc 7*5+c >>>>>c 1*Ec
 cc
  c   c 7--5c 0)2c 66Ec
cccc  c 6715c 0*++c )5Ec
ccc
c  c 7651c >>>>>>c 21Ec
 cc c 7))c 56c c
c
G cc
cc0-c8 c c c  c% cc c

cc c c

c
22c
c

Inference:

{ cc c  c c


 cc  c c  > 9c%c" ccc c
 c c  c c  > 9c%ccc  cc66Ec

{ c   c  c 


 c mid cap fundsc $ c  c   c  c  > 9c

 ccc  c7-Ecc cc c@c

{ " c c c Balanced fundc $ c   c c c  c  c  c  c   c  c


 cc c c  c c  > 9c cc  c

{ p c    c $  c  c c $ c  c  c  c c  c c c  c   c
 cc
 c c cc
c c  > 9c%c c""c c 9c c

{ c c   c cc c


cc ccc  c c cc c c


c   c p c  c c   c  c  c %c $ c  c c c
  c c cp c c c c  > 9c cc  c cc 
cc
 c 9c%c

cc

 !#c! !!c/cc" cc


×c# c
c
/c
" c
×c×# c
c
! c !#c  &
/c
" c
c  
! c !#c & 

×c×# c
c  
c

Inference:

{ p c  c $ c c c $c  c 3;c 


c  9c c c  c
  cp c ccc$cc**)+c

{ p c  c  c  c  c   c c  c 


 c c   c   c

 cc c c  c c  > 9c% c cc c    c c

cc c%c c c c%c

c
2-c
c




&

&


'



""&&

""&&

""&&

""&&

""&&

""&&

""&


×c# cc/c" c !0
""&

""&

Graph No 5
!

""&

""&

""&

""&

""&

""&

""&
21c

""&

""&
 
 
c
c

Graph No 6
c
Graph showing FII Inflow and Nifty Index













 








 

  

  

 

  

 

  

  

  

  

  

  

  

  

  
-

- 

25c c
c
 

 
' 

 

 

 
 
 


!! 

!! 

!! 

!! 

!! 

º   
!! 

 !! 

Graph No 7

!! 
!

!! 

×× 
!! 

! ! 

! ! 

!! 
26c

!! 

!! 

!! 
  
m
c
c
- 










-









  

  

 

  

 

º 
     
  

  

  


Graph No 8
 

  

  

  

  

  
27c

  

 
 

c
c

5. SUMMARY OF FINDINGS
{ p ccorrelationc $ c c 
  c c
  c  c c"   c
" c ("".c  c " 9c (. c  c  c c c c   c "c  c  c c
 c c c" 9c c c9
 c c c cc""c" $cc
c
{ "c  c c  c c  c  c  c +21Ec c  c c " 9c
c c
   c c c
 cc c""c c c%c%cc
c
{ p ccno significant correlationc $ c c  c c$c c cc" 9c
"c  c  c  c  9c  c c 9
 c c  c  c c c  $c p c
   cc  c cc c+7Ec
c
{ p c c
c c c c
c c $ c c  $c c""c c  c c c
p c c c c   c c
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c c
cc ccc  c $cc
c
{ p cRegression Analysisc c c c""c$c cc c
c c ccc
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cc cc$cp c
cc""c $c cccfour
cc  c cc cc$c
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{ p c    c  c    c  c  c
c c c   c  c p c
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{ p c   c  c c c c 
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c  c  c %c % c c  c
   c  c  c c c 10-Ec p c   c  c   c c   c

  cccc
c

-*c c
c

{ c  c ""c    c  c  c  c c  c %c   c  c 


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c c c c c c c""cc
c
{ p c""cccc c c" 9c%c c c 
c%cp cc c  c
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{ "c c  c c  c  c c c 8 c  c c  c  c   c  c

 c  c "  c %Ac  c   c  c c
 c  c  c  > 9c c c p c
  c  c  c c   c  c  c  c  > 9c 
 c c  c
 cc c c  c c   c c  c  c c -7Ec cc  c
   c c  > 9c%c
c
{ p cCoefficient of Determinationcc*0) c$  c
c c c0)Ecc c c
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  c   c @ c c
c c""c $c ccc0)5Ec cccc$cc$c c  c c
 c c c  c c     c  c c c "pD c $  c c c c
  cc
c
{ p c Durbin ± Watson Statisticc c  c  c c c  c   c
c
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3 c$c"c c c cc c  c
c c c c c c 
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 cc c c c
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c c %c  cc c
%c
c
c
c
c

-0c c
c

RECOMMENDATIONS

{ p c   c  c c c c 


 c c c
c  c  c %c p c   c
 c   c c c  c  c c c c c  c  c  c c c  c ""c
  c$ c c c%c

{ 3  c cc c c%c % c c


 ccc  cc  c
 c  cc 

{ p c c   c  c  cc



c  c c %c %c c c
 c%c%cc c c c c c""c

{ p c  ccc c  c  c c c c c
 ccc
c
 c c%c
c c  c  c c
c

{ p c  c c


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cc c c%c% c  c c 9c
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-)c c
c

6. CONCLUSION
p c c c c
c
cc""c" $c c ccc c" 9c(.c
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cc""c
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$ c c""c $c ccc
cp cc
c

p  Hypothesis c  c


cc""c cccacceptedc
c

p  Hypothesis c  c


cc  c c cccrejected.c
c
c  c c $c  c  c c 
c c  c ""c  c  c  c )25Ec c  c
c c 9c c c9
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   c cc<c  cc%cc
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c c c c 9c c c3 
c
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c %c   c

c  c c  c  cc
c3
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c
p c  c c c"  c%c%cc  c  c ccc cc cc
""c""?cc c c"  c%c9  c
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cc c%c9  cc" c
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p c   c  c c c  c c ""c c c  c  c  c c
c p c c c
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c $  c  c ""c c c c  c  c c
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c
p c c   c  c cc
c  ccc  c c%c %cccc
 c c c c c%c%cp c cc c%c%cc
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c c c
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-+c c
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7. BIBLIOGRAPHY
{ 
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-2c c
c

7. ANNEXURE
Table Showing Daily FII, MF Flow and Nifty Index for the time period 1/1//2002 to 31/12/2005

!cc × c c c# c !cc × c c c# c


""&& &   ""& &  '
&""&&   '& ""&   '&
""&&  && ' ""& &  '&&&
""&&  & ' ""&  & 
""&&   ' ""& &  &
""&& &  ' ""& '&  '
""&&  & ' ""&   '
""&& '& & ' ""&   
""&& '   ""& ' & '&
""&& '  ' ""& &&  '
""&&    &""& &&  '
""&& '&   &&""&  & '&
""&& ' &  &""& '  &
""&&    &""&   &
&""&& '  ' &""& & & &
&&""&& ' &  &""& & & &
&""&& '  & &""&   '
&""&& '   ""&   &
&""&& &  '& ""& '  &
&""&& '  ' ""& &  
&""&& '  ' ""& & & 
""&& '  ' ""&   
""&& '&&  '&& ""&   '&
"&"&& '&   ""& '  
"&"&& '   ""&  &&& 
"&"&& ' &  ""& & && 
"&"&& '  ' &""&  & '
"&"&&   '&& ""&  & '
"&"&&  & '& ""&  & '&&
"&"&& &  '& ""& & & 
&"&"&&  & ' ""& & & 
"&"&&   '& &""&  & '&
"&"&& &  '& &""&   
"&"&& &  '&& &&""& '  
"&"&& & & ' &""& & & 
"&"&& &  '& &""&  & 
&"&"&& &  '& &""& '  
&"&"&&   ' &""&   '&
&&"&"&& &  ' &""& &&  '
&"&"&&    ""&   &
&"&"&& &  ' &""& &  '&

--c c
c

&"&"&&  & ' ""&   &


&"&"&&  & & ""&  & 
""&& '&  '& ""&   '
""&&   ' ""& &&  '&
""&& '  ' ""& &  &
""&&  & '& ""&   '&
""&& &  ' ""& &  
""&&   ' &""& ' & '&
""&&   '& ""& ' && '&
&""&&   ' ""&   '&
""&& '  & ""&   '
""&& '  ' ""& & & &
""&& &  '& ""& & && 
""&&    &&""&  & '&
""&& & & ' &""&  && &
&""&& '  '&& &""& ' & 
&""&& && & '& &""& & & &
&&""&& '&  '& &""&   
&""&&  & ' &""& &  
&""&& ' & '& ""& &  
&""&&  & ' ""& & & &
""&&   '& ""& &&  
&""&&   '& ""& &  
""&&  & '& ""&   
""&& '  ' ""&   '
""&&   ' ""& & & '&
""&& & & '& ""& & & '&
""&& & & '&& ""&   
""&& '   ""&  & '
""&&    ""& &&  '
&""&&   '&& ""&   '&
""&& &&  '& ""&   '&&
""&& '  ' &""&  & 
""&& ' & '& &""&   &
""&&  & '& &&""& &  '
""&&   ' &""& &  '&
&&""&& '  '& &""& '  &
&""&& '  ' &""&  & 
&""&& '  ' &""& &&  
&""&& '  & &""& &  '
&""&&   ' &""& &  '
&""&& ' &  ""& &&  &
""&& '  & ""&   
&""&& '&   ""& &  
""&& &  '& ""&   &&
""&&   ' ""&   &&
""&&   ' ""& && && &

-1c c
c

""&&   '& ""& & & &


""&&  & ' ""&   
""&&   ' ""& &&  '
""&& '  ' &""&   '
""&& &  '&& ""&   '&
""&& &  ' ""&   '
""&& & & '&& ""&  & '&
""&&    ""& &  
&""&& '  & ""& '&  &
&""&& ' &  ""& '&  &&
&&""&& '   &""& ' && 
&""&&  & & &""&   &
&""&& '  '& &""& &  
&""&&  & ' &""& '&  &
&""&& '& & '& &""&   &
&""&& '&   &""&  & 
""&& '& &  "&"& &  &&
""&& '& &  &"&"&   &&
""&& '  & "&"& &  &
""&& '  '& "&"& & & 
""&& ' &  "&"&   
""&& &  '&& "&"& && & '
""&&   ' "&"& '  '&
""&& '   "&"&   
""&& '&  ' "&"& &  
&""&&  & '& &"&"& &  '&&
""&&  & ' "&"&  & &&
""&& '&&  ' "&"& & & &
""&& '  ' "&"& & & 
""&& '&  ' "&"& '  
""&& '& & '& "&"& &  '
&""&& '  '& &&"&"&   
&""&& ' & '& &"&"& &  '&&
&""&& '&&  ' &"&"&   
&""&& '&  ' &"&"& &&  
&""&& & & ' &"&"&   &
&""&&   ' "&"& & & 
&""&&   ' "&"& &  '&&
""&&   & ""&  && 
&""&&   ' &""& &  '&&
""&&   ' ""&   '
""&&   ' ""& & & &&
""&&   ' ""&   
""&& & & '& ""&   &
""&& &  ' ""&   
""&& '&  ' &""& &  
""&& '  ' ""& &  

-5c c
c

&""&& ' & '& ""& ' & &


""&&   ' ""& &  &
""&& &&  '& ""& '  '
""&& '& & ' ""& '  
""&& '  ' &""& & & 
""&&   ' &""&  & 
&&""&& & & ' &&""&   &
&""&& '& & ' &""&   '&
&""&& &&  ' &""&   '
&""&& '&  '& &""&   
&""&& '   &""& &  &
&""&&    ""& '&  
""&&   & "&"& '  
""&&    "&"& & &&& '
""&& '  ' "&"&   
&""&&   & "&"& &&  '
""&& '& & ' "&"& &&  '&
""&& '&&   "&"& &  
""&& '&  ' "&"&   '
""&& '&  ' &"&"& '  
""&& '  ' "&"&   
&""&& '   "&"&   '
""&&   & "&"&  & '&
""&&   ' "&"&   '
""&& ' &  "&"&   
""&&   ' &"&"& & & '
&""&&    &"&"&  & '&
&""&&   '&& &"&"& ' & 
&&""&& '&  '& &"&"& '&&  '&&
&""&&  & ' &"&"&   &
&""&&   ' &"&"& '&  '
&""&& '  ' ""& & & 
&""&&   ' ""&   '&
&""&&  &  ""& &  &
""&& &  & ""& &  &&
&""&&   & ""& ' & '
""&& '   ""&   '
""&& '&  & ""&   '&
""&& '  & ""&   
""&& ' & ' &""& & && &&
""&&    ""& &  
""&& '  ' ""& &  
&""&& &  & ""&   &
""&& ' &  ""& &  '&
""&& '  '&& ""&  & '
""&&   '& &&""&   
""&& &  ' &""&   '

-6c c
c

""&& '  '& &""& & & '


&""&& '  & &""&   
&""&& '  ' &""&   '
&""&& ' & '& &""& && & '
&""&& '  '& ""& &  '
&""&& &   ""&   &
&""&& &  & ""&   '
""&& '   &""&   
""&& ' & '& ""&   '
""&&  &  ""&   '
""&& '& & & ""& &  &
""&& '&&  && ""&   '
""&& '  & &""&  & '
""&& '   ""&   &&
""&& '&  & ""&   
""&&   '& ""& '  
""&&  & '& ""&   '
""&&   ' ""& &  '
""&& '  ' &""& & & 
""&&   '& &""&   &&
&""&& &   &&""&   &
&&""&& ' & ' &""& & & '
&""&& '  ' &""&  & '
&""&& '&&   &""& &  '
&""&& '& && ' &""&   &&
&""&& ' &&  ""& '&  
&""&& '   ""& &&  &
""&& &  ' ""&   '
""&&   & ""& '  '
""&&   ' ""& ' & &
""&& ' &  ""& '  &
""&&  & '& ""& '  &
""&& &   ""& '&  &
""&& '  ' &""& '  &&&&
""&& '&  ' ""& '&  
&""&& &  '& ""& ' & 
""&& ' & & ""& '  
""&& &  && ""& '  '&
""&&   ' ""& '&&  &&
""&&   '& &""& '  
&""&& '  ' &""& ' & 
&""&&   '& &""& '&  '
&&""&&  & '& &""& &  '&
&""&&  && '& &""& '&  '
&""&&   '& &""&   '
&""&& '   &""& '  '
&""&& '  & ""&   '&

-7c c
c

&""&& &   ""& &  '


&"&"&& '&  ' &""& & & '
"&"&&   ' ""& &  '&&
"&"&&   & ""&  & '&
"&"&& '&  ' ""& ' & 
"&"&& &&   ""& &&&  
"&"&& &   ""& &  '
"&"&& &  ' ""& &  &
"&"&& '  ' ""& '  '&&
&"&"&&   ' ""& '&  '&
"&"&&  & ' ""& &  '&
"&"&& '&&  ' ""& &  '&
"&"&&  & '& ""&  & &
"&"&& &  ' ""& ' & 
"&"&& &  '&& &""& ' & '
&"&"&&   & &&""& &  '&
&"&"&&   ' &""& '  '
&"&"&&   & &""& '  '
&"&"&& &   &""& &  &
&"&"&&    &""&   &
"&"&& &   &""&   
"&"&& '   ""&   
""& '&&   ""& ' & '
&""& &&  '& &""&   '&
""& '   ""&  & '
""& '&&  '& ""&  & '
""&   && ""& &  '
""& '&  '& ""& '  
""& &  ' ""&  & 
""&  & ' &""& '  '
""& &  & ""&   '
""&   ' ""& ' && '
""& &  ' ""& '  &
""& &   ""& '&  
""&   '& ""& &  '
&""&    &""&   
&""&   ' &""&   '
&&""&  & ' &&""&   
&""&   '& &""&   &
&""&   '&& &""&   '&&
&""&    &""& &  
&""& ' & '& &""&   '
&""& ' & &&& &""& &  '&
""&   ' ""& && & 
""&   ' &""&   '
"&"&   & ""&   
"&"&   & ""&  & '&

1*c c
c

"&"&   ' ""&   '


"&"&   & ""&   '&
"&"& &  '& ""& '& & '&&
"&"& '  '& ""& & & &&
"&"& '  '& ""&  & '
&"&"& '&  ' &""& ' & '&
"&"& '  ' ""& ' & '&
"&"& & &  ""&   &
"&"& '  ' ""& '  
"&"&   ' ""& '  
&"&"&   ' ""& '& & &
&"&"&    &""& &  &
&"&"&   & &""&  & &
&"&"& '   &""& '&  
&"&"& '   &""& '  '&
&"&"& ' &  &""& '  &
&"&"& &  & &""& &  
""&   '& ""& ' & &
""& &  ' ""&   
""& '   ""&   
""& ' & & &""& && & 
""& '  & ""&   &
""& '&  & ""&   
""&   && ""& '  '
&""&   & ""&  & 
""& '  ' ""&   '&
""& '   ""&   &&
""& '   ""&  & '
&""&  &&  ""&   
&""&   '&& ""&  & '
&&""&    ""&   &
&""&   '& ""&   '&&
&""&   ' &""&  & '
&""& '  ' &""& && & 
&""& '& & '& &&""& &  '
&""&   '& &""&  & '&
""&  & ' &""& ' && &
""&   '& &""&   '
&""&   ' &""&  & '&
""& '  ' &""&  & '
""& &  & ""&   '&
""&   '& ""&   
""&   ' ""& &&  &
""&   ' ""& & & 
""& '& && '& ""&   '
""& '&  && ""& &  
""& '& & ' ""& & && '

10c c
c

""&    ""& &  &


""& &&  '& ""&   '
&""& & & & &""&   
&&""&    ""&   '
&""& & & ' ""&   
&""& ' & ' ""&   '&
&""&  & ' ""& &  '&
&""& & &  &""&   '&
&""& ' & ' &""& '  &
""&   && &""& ' & &
&""&   & &""&   
""&   & &""&   
""& '   &""&   &
""&   ' &""& &  &
""&    ""&   &
""&   ' &""&   
&""& &   ""& &  
""& && & & ""&   '&
""& '& & '& ""&  & '&
""& &  ' ""&  & '&
""& &  ' ""& &  '&
""&    ""& &&  '
&""& &   ""&   '&
&""&   '& &""& & & &
&&""&  & ' ""& '&  '
&""& '   ""&   '&
&""&  & & ""& & & '
&""&    ""& & & &
&""&   & &&""&   &&
&""&  & ' &""&  & '
""& &   &""& &  '
&""& &  ' &""& &  
""& &  ' &""& &  '&
""&  & & ""& &  
""&   & "&"&  & 
""& &  & &"&"& &  &
""&  &  "&"& & & '
""& &  & "&"&   &
""& '&  ' "&"& & & '
&""&    "&"& &  '
""& & & ' "&"&   '
""&    "&"&   '
""& &  '& "&"& &  '
""&   ' "&"&  & 
""&  & ' "&"& & && &
&""&  & ' "&"&  && '
&""&  &  "&"&  && '
c

1)c c