A STUDY OF IMPACT OF FOREIGN INSTITUTIONAL INVESTORS ON MIDCAP & SMALLCAP MARKET

A DISSERTION SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

SUBMITTED TO: MRS. PRERNA SHRIVASTAVA (Lecturer)

SUBMITTED BY: GOPAL AGARWAL Enrollment No.: DX/07/16920

MEDICAPS INSTITUTE OF TECHNOLOGY & MANAGEMENT INDORE

CERTIFICATE

This is to certify that Mr. Gopal Agarwal a student of Master of Business Administration, Medicaps Institute of Technology & Management, Indore, has successfully completed his project under my supervision. During this period he worked on the project titled A STUDY OF IMPACT OF FOREIGN INSTITUTIONAL INVESTORS ON MIDCAP & SMALLCAP MARKET in fulfillment for the award of degree of Master of Business Administration of Devi Ahilya Vishwavidhyalaya, Indore.His performance and conduct has been good.

HEAD OF DEPARTMENT

PROJECT GUIDE

(Dr. Hemant Indurkar) Director

(Mrs. Prerna Shrivastava) Lecturer

ACKNOWLEDGEMENT

I want to express my sincere gratitude to all those who made this study possible. First of all I am thankful to the helpful staff and the faculty of Medicaps Institute of Technology & Management. One of the most important tasks in every good study is its critical evaluation and feedback which was provided to me by my guide Mrs. Prerna Shrivastava.I am also thankful to Mr. Vardhan Choubey for investing his precious time to discuss and criticize this study in depth and explained the meaning of different concepts and how to think when it comes to problem discussions and theoretical discussions. I am also thankful to Mr. Akhilesh Rathi owner of SNR Securities & Finance A Franchisee of Angel Broking Ltd. for his support and guidance for the project.

(Gopal Agarwal)

CONTENT

Abstract I II III IV V Introduction........................................................................................................... 6 Rationale of Study. 7 Objective............................................................................................................... 8 Research Methodology ........................................................................................ 9 Foreign Institutional Investors.. 10 V.i FII registered in India V.ii Why FII Invest in India VI BSE Mid-Cap and BSE Small-Cap Index. 12 VII Foreign Institutional Investment: A Cost - Benefit Analysis. 13 VIII Analysis. 14 IX Results... 17 X Conclusion. 18 Appendix Historical Datasheet Midcap & Smallcap Indices Vs Sensex FII Investment Vs Midcap & Smallcap Indices Volatility Analysis Scripwise Impact of FII Shareholding on Price Movement of Midcap Companies Scripwise Impact of FII Shareholding on Price Movement of Smallcap Companies References

ABSTRACT

Foreign Institutional Investors have gained a significant role in Indian capital market. This project analyses the impact of foreign institutional investment particularly among Midcap & Smallcap market of Bombay Stock Exchange. Analyzing the relationship between foreign institutional investment and movement of indices and movement of prices of ten scrip each of Midcap and Smallcap Indices. It is observed that there is a high degree of correlation between Midcap & Smallcap Indices and Sensex and also FII gross purchases show high degree of correlation with Midcap and Smallcap Indices.FIIs are also responsible for volatility in the stock market.

INTRODUCTION

The increasing role of institutional investors has brought both quantitative and qualitative developments in the stock market viz.; expansion of securities business; increased depth and breadth of the market, and above all their dominant investment philosophy of emphasizing the fundamentals have rendered efficient pricing of the stocks. The FIIs are major institutional investors in Indian capital market. Movement in the sensex has clearly been driven by the behavior of Foreign Institutional Investors. The presence of Foreign Institutional Investors in the BSE Midcap & Smallcap companies and their active trading behaviours, their role in determining the share price movements must be considerable. Indian stock markets are known to be known narrow and shallow in the sense that there are few companies whose shares are actively traded. Although there are more than 8000 companies listed with stock exchange, the BSE Midcap & Smallcap Index incorporates only 685 companies. This shallowness also means that the FIIs can also affect the behavior of other retail investors, who tend to follow the FIIs when making their investment decision. Theoretically, FII investments bring in global liquidity into the equity markets and raise the price-earning ratio and thereby reduce the cost of capital domestically. Lower cost of funds on account of low interest rates will aid the economic recovery and support valuations; Net FII inflows into India increased steadily since the mid 1990s and reached Rs. 32000 crore in 2009. Along with this surge in FII inflows there has also been a boom in the Indian capital market as indicated by the stock market indices and market capitalisation. The surge in capital inflows could be viewed as an outcome of a combination of push and pull factors, of which stagnant returns from the previous investment destinations and the present rate of growth of Indian economy seems to play an important role. Apart from other macro economic consequences, investors are directly affected by this increase in FII flows as it enhances or diminishes the security prices and returns in Indian capital market.

RATIONALE OF STUDY

Foreign Institutional Investors are said to be the drivers of the market. They are the cause behind the rise and fall of Sensex. FII investment trends tell us about many effects that the Indian market is experiencing. The companies in which they invest are getting overvalued. Whenever FII find any trouble they withdraw their investments. There is a lot of discussion in the market about Sensex of BSE but many of us do not talk about other Indices like BSE Midcap and Smallcap which are high growth oriented and risky investment avenues.The return provided by them is high as compared to Sensex scrips. FIIs are also interested in investment in these scrips and impact these indices. So inorder to find the impact of FII on these market I had taken this study.

OBJECTIVE

The objective of this study is to: Find the relation of Midcap & Smallcap Indices with the Sensex. Find the relationship between the Midcap & Smallcap Indices variations with the variation of investments made by the Foreign Institutional Investors. Find the impact of activities of Foreign Institutional Investors on the volatility of Midcap & Smallcap market. To analyze the impact of FII shareholding on Price movement of Midcap & Smallcap companies.

RESEARCH METHODOLOGY
Research refers to search for knowledge. One can define research as a scientific & systematic search for pertinent information on a specific topic. Research is an original contribution to existing stock of knowledge making for its advancement. It is the pursuit of truth with the help of observations. Type of Research: The Research which will be carried out by me is descriptive & analytical Research. The Research is on A Study of Impact of Foreign Institutional Investors on Midcap & Smallcap Markets .I am focusing my research on Midcap & Smallcap market of Bombay Stock Exchange.In this research I have used FIIs gross purchases data to find the relation with Midcap & Smallcap Indices. I have used both FIIs gross purchases & sales data to analyse the volatility. I have taken closing prices of Midcap & Smallcap companies & closing value of both Indices. Data Collection: Secondary sources have been used for the collection of the data used in the research. Collecting data from Internet. Collecting data from BSE, SEBI websites etc. Collecting Information from books. Collecting data from Magazines.

Sample Size: Four year data was collected as: Monthly data from BSE of Midcap & Smallcap Indices (2005-2009) Monthly data of FII flow in equity (2005-2009) Quarterly FIIs shareholding data of ten companies each of Midcap & Smallcap Indices (2005-2009) Quarterly closing price data of ten companies each of Midcap & Smallcap Indices (2005-2009) Tools for Analysis: Various Graphs/Charts etc. Correlation Analysis

FOREIGN INSTITUTIONAL INVESTOR

Foreign Institutional Investor (FII) is used to denote an investor - mostly of the form of an institution or entity, which invests money in the financial markets of a country different from the one where in the institution or entity was originally incorporated. FII investment is frequently referred to as hot money for the reason that it can leave the country at the same speed at which it comes in. The Union Government allowed the entry of FIIs in order to encourage the capital market and attract foreign funds to India. Today, FIIs are permitted to invest in all securities traded on the primary and secondary markets, including equity shares and other securities listed or to be listed on the stock exchanges. The original guidelines were issued in September 1992. Subsequently, the Securities and Exchange Board of India (SEBI) notified the SEBI (Foreign Institutional Investors) Regulations, 1995 in November 1995. Over the years, different types of FIIs have been allowed to operate in Indian stock markets. They now include institutions such as pension funds, mutual funds, investment trusts, asset management companies, nominee companies, incorporated/institutional portfolio managers, university funds, endowments, foundations and charitable trusts/societies with a track record. Proprietary funds have also been permitted to make investments through the FII route subject to certain conditions. FIIs can invest in all securities traded on the primary and secondary markets. Such investments include equity/debentures/warrants/other securities/instruments of companies unlisted, listed or to be listed on a stock exchange in India including the Over-the-Counter Exchange of India, derivatives traded on a recognized stock exchange and schemes floated by domestic mutual funds. A major feature of the guidelines is that there are no restrictions on the volume of investment - minimum or maximum - for the purpose of entry of FIIs. There is also no lock-in period prescribed for the purpose of such investments. Further, FIIs can repatriate capital gains, dividends, incomes received by way of interest and any compensation received towards sale/renouncement of rights offering of shares subject to payment of withholding tax at source. The net proceeds can be remitted at market rates of exchange. FII REGISTERED IN INDIA: The SEBI is the nodal agency for dealing with FIIs, and they have to obtain initial registration with SEBI. For granting registration to an FII, the SEBI takes into account the track record of the FII, its professional competence, financial soundness, experience and such other criteria as may be considered relevant by SEBI. Besides, FIIs seeking initial registration with SEBI will be required to hold a registration from an appropriate foreign regulatory authority in the country of domicile/incorporation of the FII.India had 528 FIIs registered with SEBI by end of 2001 and by end of Mar-2009 the number increased to1581. The trend in the number of registered FIIsTable-3 has been consistently on the rise showing the significant amount of confidence that Indian Capital market has developed in the last few years. Not only has been the number increasing on a consistent basis, but the amount of inflow into Indian market has also seen a manifold increase. The gross purchase, sales and net investment Table-4 figure on monthly basis gives a fair idea about the consistency of their investments in our country.

10

WHY FII INVEST IN INDIA: As per the theory of international portfolio investment the basic motivation for any investor including the FIIs for investing in foreign equity is to diversify their portfolio, reduce the diversifiable risk and earn higher returns. Essentially this is a two-step decision. The first step is the choice of the country. Having decided on the host country, the FII has to decide about the portfolio composition or portfolio choice within the country concerned. In taking the first step, since international investments involve returns in foreign currency, the same have to be factored in the analysis. Consider an American investor buying stock of an Indian company. Let P0 and P1 be the stock prices at the beginning and end of the investing period respectively. The domestic return in India on this stock can be labeled Rd, which would be as follows: Rd = (P1-P0) /P0 .......................................................(1) For the foreign investor, the return would be RF derived as follows: RF = (X1P1- X0P0) /X0P0 .......................................... (2) where, X0, X1 denote the Rupee-Dollar exchange rate at the beginning and end of the investing period. Any foreign equity investor simultaneously invests in the currency of the country whose stock is purchased and returns on currency Rc would be as follows: Rc = (X1-X0)/X0 From equations (1), (2) and (3) it can be shown that 1 + Rf = (1+Rd) (1+Rc) and Rf = Rd + Rc + RdRc Since the product of Rd and Rc would be small, both being percentages and less than 1.0, it can be concluded that Rf approximates to (Rd+Rc). Taking variance of this approximation as a measure of risk to an international investor in domestic stock we have VarRf = VarRd + VarRc + 2(Correlation of Rd and Rc) (Std.Deviation of Rd) (Std.Dev.of Rc) where, Var stands for variance of expected returns, as measure of risk. Now, risk for a foreign investor would be determined among other things by correlation between domestic returns in the host country and returns on its currency, which can be very low or even negative. More importantly, since correlations between stock returns in different countries are lower than correlations among stock returns in the same country, investment in foreign assets can reduce the overall risk for an investor holding an internationally diversified portfolio. ...................................................... (3)

BSE MIDCAP AND BSE SMALLCAP INDEX

11

BSE introduced the new index series called 'BSE Midcap' index and 'BSE Smallcap' index on April 11, 2005 with base index value 1000 to track the performance of companies with relatively smaller market capitalization. The market capitalisation of the company represents the total dollar value of the company's outstanding shares. This is equal to the current market price of its stock multiplied by the number of shares of stock that it has outstanding. That number gives you the market value of the company, which is one measure of the company's size. Roughly speaking, there are three basic categories of market capitalisation: largecap, midcap and smallcap.The definitions for each of these might vary somewhat depending on whom you are talking to, but usually they are as follows: Largecap: Market Cap valued at more than $ 10 billion Midcap: Market cap valued between $ 2 billion and $ 10 billion Smallcap: Market cap valued at less than $ 2 billion In general, the larger the cap size, the more established the company and the more stable the price of its stock. Smallcap and Midcap companies usually have a higher potential for future growth than largecap companies,but their stock tends to fluctuate more in price.Midcap stocks are more risky than large cap stocks and less risky than smallcap stocks. Then what makes a small & midcap attractive to investors is the potential for growth that could result in a significant return on the shares of stock. Because the company issuing the stock is considered to be growing, there is great potential for the price per share to increase over the short term. For investors who wish to realize quick gains on their investments, these appear to be an ideal investment. However, the enhanced potential for growth also carries an increased level of volatility. As time goes on, the company could encounter unforeseen factors that inhibit the increase in the value of the stock. When this happens, the stock may become stagnant or even begin to fall in value. In Smallcap and Midcap indices the numbers of companies are 464 and 221 respectively.

FOREIGN INSTITUTIONAL INVESTMENT: A COST - BENEFIT ANALYSIS

There are always some costs associated with a lot of benefits. So it is useful to summarize the benefits and costs for India of having foreign inflows. 12

BENEFITS A) Reduced cost of Equity: FII investment reduces the required rate of return for equity, enhances stock prices, and fosters investment by Indian firms in the country. B) Knowledge Flows: The activities of international institutional investors help strengthen Indian finance. FIIs advocate modern ideas in market design, promote innovation, development of sophisticated products such as financial derivatives, enhance competition in financial intermediation and lead to spillovers of human capital by exposing Indian participants to modern financial techniques and international best practices and systems. C) Strengthening Corporate Governance: Domestic institutional and individual investors, used as they are to the ongoing practices of Indian corporate, often accept such practices, even when these do not measure up to the International benchmarks of best practices. FIIs, with their vast experience with modern corporate governance practices, are less tolerant of malpractice by corporate managers and owners (dominant shareholder). FII participation in domestic capital markets often lead to vigorous advocacy of sound corporate governance practices, improved efficiency and better shareholder value. D) Improving Market Efficiency: A significant presence of FIIs in India can improve market efficiency through two channels. First, when adverse macroeconomic news, such as a bad monsoon, unsettles many domestic investors, it may be easier for a globally diversified portfolio manager to be more dispassionate about India's prospects and engage in stabilizing trades. Second, at the level of individual stocks and industries, FIIs may act as a channel through which knowledge and ideas about valuation of a firm or an industry can more rapidly propagate into India. COSTS A) Create Volatility: There are concerns that foreign investors may withdraw their money at the hint of a trouble in India or firm. This will make others to also take out their money creating volatility in the market. B) Possibility of Takeovers: While FIIs are normally seen as pure portfolio investors, without interest in control, portfolio investors can occasionally behave like FDI investors and seek control of companies that they have a substantial shareholding in. Such outcomes, however, may not be inconsistent with India's quest for greater FDI.

ANALYSIS
13

The introduction of Midcap & Smallcap Indices at Bombay Stock Exchange was on April 11,2005 so for the purpose of statistical analysis I have considered four years monthly data from April-2005 to March-2009 of FII Investments,BSE Midcap,Smallcap & Sensex Indices and scripwise quarterly data of FII Shareholding. Correlation Test has been carried out to find the degree of association between the FII Gross Purchases and BSE Midcap & Smallcap Indices; Sensex and Midcap & Smallcap Indices;FII Shareholding & Scripwise price. I have considered closing price for Sensex, Midcap & Smallcap Indices and various scrips. First of all correlation between sensex and midcap & smallcap indices is carried out to verify relation between them. CORRELATION TEST: A) Midcap & Smallcap Indices Vs Sensex & Gross Purchase: SENSEX FII GROSS PURCHASE 0.947956419 0.825463052 0.896880823 0.794646577 (refer Annexture 1,2,3) Table-1 B) Scripwise Price Vs FII Shareholding: MIDCAP INDEX SMALLCAP INDEX COMPANY NAME MIDCAP JSW Steel Ltd. United Phosphorus Ltd. Colgate Palmolive India Ltd FII SHAREHOLDING 0.545181642 -0.258261613 0.624952178 0.300078199 0.561075571 0.189994534 0.446184332 0.093306698 0.342942159 -0.318073722 0.619250624 0.773371425 0.111440389 0.356246159 -0.051450138 0.056704137 0.519389221 -0.191815788 0.584577343 0.584286285

Federal Bank Ltd Jain Irrigation Systems Ltd Lupin Ltd INDIAN HOTELS COMPANY LTD Voltas Ltd Tata Tea Ltd Mphasis Ltd SMALLCAP South Indian Bank Ltd Kesoram Industries Ltd Gammon India Ltd Raymond Ltd NIIT LTD United Breweries Holdings Ltd Bombay Dyeing & Manufacturing Company Ltd Mahindra Lifespace Developers Ltd TVS Motor Company Ltd Rain Commodities Ltd Table-2

Sensex of Bombay Stock Exchange is considered as the barometer of Indian Capital Market. So first of all I 14

begin with analyzing the relation between Sensex and Midcap & Smallcap Indices. From the Graph-1 between Midcap Index and Sensex we can find co-movement between two indices leaving some months August-2005, March-2006, April-2006 and November-2007. From the Graph-2 between Smallcap Index and Sensex we can find co-movement between two indices leaving some months August-2005, June-2006 and November-2007 .This inference is further supported by high degree of correlation coefficient obtained between two variables in the Table-1 above. This high degree of correlation further suggests that there is some Indirect/Direct correlation between the Midcap & Smallcap Indices and FIIs investments. FIIs gross purchases have been taken as independent variable to find the impact of FII because net investments involve negative values when there are more sales as compared to purchases but Midcap & Smallcap Indices values are always positive instead of major falls/gains in the Indices. By taking Gross Purchases I have tried to eliminate this mathematical error and used gross purchases fluctuations to find the relation between the two.FII invest in scrips of these Indices because they provide higher returns as compared to largecap scrips. Table-1 indicates a high degree of correlation between Midcap & Smallcap Indices and FIIs gross purchases. Analysis of Graph-3 & Graph-4 indicates that there is a co-movement between the two variables barring the period Jun-2005 to Aug-2005, Nov-2007 to Jan-2008 indicating negative correlation. During Nov-2007 to Jan-2008 the FII purchases decreased because during the month of Oct-2007 Indian government took some strict measure to control the usage of the Participatory notes. This lead the FII to withdraw from the Indian market as they were not sure of how the measure taken by the govt will be implemented. During the month of Dec-2007 the subprime losses caused the decrease in purchases by the FII. As the subprime losses mainly hit the US economy and the majority of FII participating in the Indian capital market are from US. Graph-5 represents the relation between gross purchases and gross sales. We can see from the graph that gross purchases are increasing from Apr-2005 to Mar-2006 & Jul-2006 to Oct-2007 and whenever gross sales are lower than gross purchases there is upward trend in both Indices leaving some exceptions as there are certain other factors like foreign exchange rate, interest rate, political conditions of the country etc.which affect the indices movement. This analysis indicates the impact of FIIs on Indices. An FII driven market can impact the real economy indirectly, when their behavior in the market exerts pressure on policy makers. Secondly, the wealth effect where capital gains are translated into increased consumption and investment, can act as a more direct link between equity and physical markets. FIIs are always considered to increase the volatility of market. Volatility is often viewed as a negative in that it represents uncertainty and risk. However, volatility can be good in that if one shorts on the peaks, and buys on the lows one can make money, with greater money coming with greater volatility. The possibility for money to be made via volatile markets is how short term market players like day traders hope to make money, and is in contrast to the long term investment view of buy and hold. Foreign institutional investment is certainly volatile in nature and its volatility has certainly posed some threats to the Indian stock market considering its influence on the market. Increase in investment by FIIs cause sharp price increase. It would provide additional incentives for FII investment and this encourages further investment so that there is a tendency for any correction of price and when the correction begins it would have to lead by an FII pullout and can take the form of extremely sharp decline in the share prices.Graph-5 clearly indicates this fact that whenever there are more purchases as compared to sales than there is increase in the value of Indices and whenever there are more sales as compared to purchases there is decrease in Indices. Table-2 indicates varying degrees of correlation between FII shareholding and Scripwise price of sample companies of Midcap & Smallcap Indices but if we take the average of quarterly data of FII shareholding & Scripwise price it shows significant co-movement. The growing significance of FIIs in the Midcap & Smallcap Indices can be observed from the increase in average percentage share of FIIs in sample companies of Midcap & Smallcap Indices, which has increased from 14.513% in Jun 2005 to 25.04% in Dec- 2007 in Midcap companies and from 11.618% in Jun-2005 to 25.555% in Sep-2007 in Smallcap companies. We can see negative correlation between FII shareholding and Scripwise price of sample companies of Midcap & Smallcap Indices because only FIIs are not responsible for the fluctuations instead there are other factors like company specific factors, speculative trading, interest rate prevailing in the market, political factors, government policies related to specific sectors etc. which cause a significant 15

change in the prices.

RESULTS

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 There is a continuous increase in the number of registered FIIs and the Gross purchases made by them. The movements in Midcap & Smallcap Indices and Sensex are highly correlated. The movement of FIIs gross purchases follows almost significant influence on the movement of Midcap & Smallcap Indices. When there is a downward trend in FIIs due to huge selling, there is decline in Midcap & Smallcap Indices. On the other hand if there is an upward trend in FII due to more gross purchases as compared to selling, Indices rises. The high degree of volatility in stock market is due to 1) The increase in investment by FIIs which increases stock indices that in turn increases the price and encourages further investments. In this event when any correction takes place the stock price decline and there will be pull out by the FII in a large number as earning per shares declines. 2) The FIIs manipulate the situation of boom in such a manner that they will wait till the index rises up to a certain height and exit at an appropriate time. This tendency increases the volatility further. There is a continuous increase in FII shareholding of companies of Midcap & Smallcap Indices. Together with FIIs there are also other factors which influence the movement of Indices and stock prices like company specific factors, speculative trading, interest rate prevailing in the market, political factors, government policies related to specific sectors etc.

CONCLUSION
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In the Indian stock market FIIs have a disproportionately high level of influence on the market sentiments and price trends. Results of the study shows the linkages between the FIIs inflows and the performance of Midcap & Smallcap Indices are robust and significant.FIIs have significant impact on the share prices of the Midcap & Smallcap Indices companies and their active trading behaviour.Small and periodic shifts in their behavior leads to market volatility. Lastly I would like to recommend that Government should certainly encourage Foreign Institutional Investment but should keep a check on the volatility factor. Long term funds should be given priority and encouraged. Some of the actions that could be taken to ensure stability are Strengthening domestic Institutional Investors Operational flexibility to impart stability to the market Knowledge activities and research programs

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APPENDIX

19

HISTORICAL DATASHEET

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FII REGISTERED IN INDIA

FINANCIAL YEAR 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2001-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

DURING THE YEAR 0 3 153 197 99 59 59 56 84 48 51 83 145 131 247 253 232
Table-3

TOTAL REGISTERED 0 3 156 353 439 496 450 506 528 490 502 540 685 803 993 1219 1581

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Month April-2005 May-2005 June-2005 July-2005 August-2005 September-2005 October-2005 November-2005 December-2005 January-2006 February-2006 March-2006 April-2006 May-2006 June-2006 July-2006 August-2006 September-2006 October-2006 November-2006 December-2006 January-2007 February-2007 March-2007 April-2007 May-2007 June-2007 July-2007 August-2007 September-2007 October-2007 November-2007 December-2007 January-2008 February-2008 March-2008 April-2008 May-2008 June-2008 July-2008 August-2008 September-2008 October-2008 November-2008 December-2008 January-2009 February-2009 March-2009

FII INVESTMENT (Rs. Crore) Gross Gross Sales Net Purchase Purchase/Sales 15261.7 16308.8 -1047.1 15522.6 16330.2 -807.6 27693.1 21931 5762.1 25589.3 17377.1 8212.2 26455.1 22042.5 4412.6 24160.7 20056.1 4122.6 25817.5 29623.1 -3805.6 23739.1 19290.5 4448.6 31563.4 22098.2 9465.2 34762.8 31542.1 3220.7 35603.1 28031.2 7571.9 53578.7 47046.4 6532.3 40415.6 39826.4 589.2 49338.2 57585.5 -8247.2 39845.6 38427.4 1418.2 24983.1 23535.2 1447.9 28104.6 23330.6 4774 33014.2 26782.5 6231.7 27591.94 23013.3 4578.54 31146.96 24572.22 6574.74 37419.5 40830.4 -3410.9 47506.77 47412.32 94.45 51568.9 45503.9 6065 50552.6 49149.3 1403.3 44701.5 39269.7 5431.8 51574.9 47000.4 4574.5 54748.5 46808.9 7939.6 80216.2 62083.4 18132.8 58223.2 65750 -7526.8 70694.6 51746.1 18948.5 124882.3 109304.7 15577.6 89510 94107.4 -4597.4 80988.1 76091.4 4896.7 103129 120455.3 -17326.3 76437.1 71017.2 5419.9 70322.7 70198.3 124.4 62969.6 61990.6 979 60640.3 65557.6 -4917.3 61490.6 72068.3 -10577.7 64526.3 65539.2 -1012.9 46401.9 48467.7 -2065.8 68029.6 75966.6 -7937 49339.3 63587.9 -14248.6 28273.8 31094.1 -2820.3 29197.6 27866.7 1330.9 29458.7 32573.6 -3114.9 21863.2 24553.7 -2690.5 32177.4 31908.4 269

Midcap Index close 3049.65 3263.27 3310.35 3680.92 4064.49 4196.7 3771.56 4175.19 4427.03 4716.53 4789.75 5348.62 5843.29 5052.44 4381.11 4303.28 4798.07 5148.38 5396.13 5721.6 5805.18 6045.1 5508.74 5384.12 5795.72 6222.4 6527.03 6718.08 6608.42 7422.43 8135.21 8553.56 9789.49 7766.62 7680.39 6427.82 7138.74 6760.54 5386.48 5567.37 5742.29 4798.29 3200.02 2885.76 3235.05 2941.47 2758.29 2956.23

Smallcap Index close 3839.25 4300.84 4396.21 4919.51 5925.14 5697.69 4952.5 5567.17 5943.11 6225.35 6144.48 6591.66 7397.48 6364.29 5357.04 5131.48 5778.99 6161.73 6392.59 6647.08 6892.32 7503.5 6705.91 6470.51 6993.84 7413.03 7730.4 8070.63 8060.52 9099.93 9796.86 10526.02 13348.37 10124.42 9628.13 7841.62 8773.57 8133.04 6701.96 6912.79 6891.64 5577.47 3765.11 3304.61 3683.11 3339.05 3106.01 3246.63

Sensex close 6154.44 6715.11 7193.85 7635.42 7805.43 8634.48 7892.32 8788.81 9397.93 9919.89 10370.24 11279.96 12042.56 10398.61 10609.25 10743.88 11699.05 12454.42 12961.9 13696.31 13786.91 14090.92 12938.09 13072.1 13872.37 14544.46 14650.51 15550.99 15318.6 17291.1 19837.99 19363.19 20286.99 17648.71 17578.72 15644.44 17287.31 16415.57 13461.6 14355.75 14564.53 12860.43 9788.06 9092.72 9647.31 9424.24 8891.61 9708.5

Table-4

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MIDCAP COMPANY JSW Steel

UNITED PHOSPHORUS LTD

COLGATE PALMOLIVE INDIA LTD

Quarter Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06

Percentage Shareholding of FII 9.34 10.97 15.33 17.8 19.34 19.33 18.76 18.74 23.41 26.5 29.03 26.36 29.27 28.23 29.36 29.03 26.1 25.54 28.23 35.21 35.35 35.44 35.13 33.57 34.98 35.39 44.49 43.1 41.63 38.24 35.27 34.78 4.83 5.17 7.2 10.06 9.94 10.57 11.39 11.85 11.83 10.92 8.15 7.84 7.9 8.19 9.12 10.09 8.74 15.51 26.43 21.32 30.46 33.16

Closing Price 251.2 289.75 229.3 302.7 275.15 285.5 386.9 493.45 611.45 851.05 1318.45 819.1 901.1 480.2 229.5 231.85 807.05 209.25 240.05 261.35 236.55 244.05 300.35 324.55 311.1 396.2 348.8 262.3 280.15 308.85 107.6 97.75 243.95 250.35 269.35 432.05 388.95 367.3 388.5 332.4 369.6 401.9 407.45 382.35 355.55 403.4 408.1 470.75 158.6 187.5 182.35 201.65 166.25 211.75

Federal Bank Ltd

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Jain Irrigation Systems Ltd

Lupin Ltd

INDIAN HOTELS COMPANY LTD.

Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08

37.25 33.64 35.49 38.13 39.6 42.05 42.15 42.79 39.93 38.89 10.12 33 39.8 35.16 38.58 40.35 40.89 42.98 40.22 41.93 41.31 39.6 43.22 41.97 41.1 42.99 13.92 11.7 12.35 12.77 12.12 12.94 13.58 13.77 10.84 10.99 13.46 8.25 12.41 12.98 11.85 11.15 19.32 22.87 23.46 22.33 21.31 23.43 22.43 24.07 23.46 22.56 22.17 19.28 18.68 17.19 17.43

218.25 215.55 302.05 372.05 335.95 216.3 182 204.5 162 138.1 132.3 171.1 208.2 250.75 217.7 275.1 382.8 417.55 480.15 546.05 645.85 592.05 486.95 401.05 350.3 342.1 695.1 755.45 766.85 1018.6 895 461.25 612.05 605.65 732.55 586.15 633.7 493.9 666.85 719.9 617.85 689.2 624.25 765 988.05 1356.9 1143.35 1384.3 154.25 145.4 150.6 138.15 159.55 111.85 77.15 67.4 45.05

24

Voltas Ltd

Tata Tea Ltd

Mphasis Ltd

Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09

17.17 11.4 18.89 21.84 23.45 24.08 24.48 27.48 28.69 29.99 26.63 26.48 22.2 19.99 17.89 15.26 11.31 19.03 22.93 22.3 18.09 17.1 12.09 11.51 12.94 12.47 12.66 13.18 12.91 14.51 14.45 13.46 13.44 22.33 29.34 31.23 31.26 16.28 13.14 13.83 11.47 11.61 9.6 12.53 13.79 16.56 15.38 15.08 11.69

39.4 229.55 475.45 599.7 1004.75 773.65 103.5 114.4 84.8 111.25 162.95 246.25 177.95 123.75 92.3 60.3 46.15 620.05 841.05 948.35 867.95 765.5 749.15 720.05 607.85 852.75 802.3 905.65 824.35 746.95 669.95 602.15 585.65 277.05 249.75 149.2 208.3 151.55 185.55 303.45 282.25 328.35 286 306.6 200.1 214.9 189 156.35 199.2

Table-5

25

SMALLCAP COMPANY South Indian Bank Ltd

Kesoram Industries Ltd

Gammon India Ltd

Raymond Ltd

Quarter Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07

Percentage Shareholding of FII 1.32 4.19 4.19 18.48 20.33 27.28 35.04 41.84 43.21 44.07 46.86 45.84 42.74 40.94 39.71 35.9 6.64 5.64 4.95 5.87 3.9 5.73 7.18 7.43 7.42 9.07 8.72 5.96 4.98 4.84 3.94 3.99 9.05 11.67 13.51 17.9 24.93 28.58 29.79 30.81 32.8 34.34 31.21 28.26 25.98 24.77 23.74 25.06 10.12 10.53 9.72 7.58 6.9 5.2 5.07 4.63

Closing Price (Rs.) 55.65 73.65 64.7 61.65 54.45 69.55 85.1 99 127.1 163.25 222 139.2 100.85 103.75 56.75 51.3 114.75 163.55 153.75 211.9 215.45 503.55 546.95 342.95 453.35 578.95 588 391.75 255.3 216.75 138.4 135.35 264.15 406.3 414.3 541.5 349.7 364.6 419.5 301.05 410.75 465.6 595.05 388.55 216.35 138.15 78.6 58 331.55 390.7 403.95 517.7 401.65 451.1 400.05 341.55

26

NIIT LTD

United Breweries Holdings Ltd

Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05

2.54 2.53 2.43 4.52 4.38 4.44 3.63 4.46 18.23 22.35 22.35 29.88 41.42 41.74 39.68 38.78 40.48 93.97 43.71 43.69 42.86 42.66 34.8 28.02 24.45 24.07 15.33 15.63 18.63 20.61 23.35 24.92 25.01 24.7 29.9 28.88 28.61 27.76 27.56 24.9 11.49 14.45 14.88 14.23 14.49 13.91 13.28 14.51 13.89 13.56 9.68 6.68 6.09 5.12 3.52 1.5 22.29

308.2 324.1 441.2 297.65 223.85 134.7 107.15 76.45 222.35 296.25 288.75 296.4 367.35 330.3 525.15 696.8 1003.15 160.75 156.8 98 107.15 51.45 26.55 20.25 446.95 437.4 524.85 726.9 444.95 265.45 345.05 359.5 609.2 946.6 1243.95 717.75 318.15 227.25 108.65 75.5 336.2 383.15 372.95 595 580.75 754.95 766.35 540.85 573.6 675.1 755.35 614.3 581.8 371.55 193.15 167.95 140.1

Bombay Dyeing & Manufacturing Company Ltd

Mahindra Lifespace Developers Ltd

27

TVS Motor Company Ltd

Rain Commodities Ltd

Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09 Jun , 05 Sep , 05 Dec , 05 Mar , 06 Jun , 06 Sep , 06 Dec , 06 Mar , 07 Jun , 07 Sep , 07 Dec , 07 Mar , 08 Jun , 08 Sep , 08 Dec , 08 Mar , 09

24.9 26.49 26.73 12.96 13.23 30.69 26.99 26.35 22.78 22.93 21.28 21.74 23.18 26.74 25.65 12.59 12.42 11.01 8.93 7.65 6.76 4.1 5.34 4.44 4.41 4.28 6 3.68 4.95 3.43 2.17 0 0 0 0 1.44 1.38 4 4.73 5.86 6.12 6.43 6.5 7.56 8.02 7.61 7.58

274.3 395.9 462.2 603.9 807.9 876.3 568.3 555.4 618.6 843.45 413.2 426.25 342.35 178.15 132.15 72.05 92.75 100.05 140.05 97.8 124.45 87.3 59.6 60.9 70.05 72.45 34.95 26.45 32.65 22.5 22.65 39.95 47.95 59.75 87.05 74.4 173.05 170.2 119.65 147.55 175.55 293.85 195.1 177.65 185.75 90.25 81

Table-6

28

MIDCAP & SMALLCAP INDICES VS SENSEX

29

Smallcap Index
Midcap Index

10000

12000

14000

16000

200 0
10000 2000 4000 6000 8000 0 Midcap Index

400 0

600 0

800 0

12000

M o n th
Month

M IDCAP Vs SEN SEX

SM ALLCAP Vs SEN SEX

S m a llc a p In d e x S e n s e x

Graph-2

Graph-1

30
S ensex

Ap r M il-2 Ju ay-200 5 ne 00 - 5 Se Au July 2005 pte gu -2 0 st - 05 m No Octber- 20 05 o 2 De v em ber-005 ce be 20 0 mb r-2 5 Ja e 0 Fe nua r-2 00 5 br ry- 05 u 2 Mary - 006 arc 20 Ap h- 206 r 0 M il-2006 Ju ay-2 0 6 ne 00 - 6 Se Au July 2006 pte gu -2 0 m st - 06 No Octber- 20 06 v e obe200 De m r- 6 ce be 20 Jamber-20 06 Fe nua r-2 00 6 br r y 06 u -2 Mary - 007 arc 20 Ap h- 207 r 0 M il-2 07 Ju ay- 200 7 ne 00 - 7 Se Au July 2007 pte gu -20 mb st- 07 O No ct oer- 2 20 07 Dev em ber-007 ce be 20 Jambe r-20 07 Fe nua r-200 7 bru ry- 07 2 Mary - 008 arc 20 h- 08 Ap 2 r 0 M il-2008 Ju ay-2 0 8 ne 00 - 8 Se Au July 2008 pte gu -2 0 m st - 08 No Octber- 20 08 v e obe200 De m r- 8 ce be 20 Jambe r-20 08 Fe nua r-2 00 8 br ry 08 u -2 Mary - 009 arc 20 h- 09 20 09
Ap r M il-2 Ju ay- 0 05 n 20 J e-2 05 Se Au uly 005 pt gu -20 e s 0 O mb t -2 5 No cto er- 005 ve ber 2 00 De m - 5 ce be 20 Ja mb r-2 05 Fe nu aer- 2 005 br ry 00 u - 5 M ary 200 ar -2 6 Ap ch - 006 r 20 M il-2 06 Ju ay- 0 06 n 20 J e-2 06 Se Au uly 006 pt gu -20 e s 0 O mb t -2 6 No cto er- 006 ve ber 2 00 De m - 6 ce be 20 Ja mb r-2 06 Fe nu aer-2 006 br ry 0 0 u - 6 M ary 200 ar -2 7 Ap ch - 007 r 20 M il-20 07 Ju ay- 07 n 20 J e-2 07 Se Au uly- 007 pt gu 20 e s 0 O mb t -2 7 No cto er- 007 ve be 2 00 De m r- 7 ce be 20 Ja mb r-2 07 Fe nu aer-2 007 br ry 0 0 u - 7 M ary 200 ar -2 8 Ap ch - 008 r 20 M il-2 08 Ju ay- 2008 ne 00 Au July-200 8 Se pt gu -2 0 8 e s 0 O mb t -2 8 No cto er- 008 ve be 2 00 De m r- 8 ce be 20 Ja mb r-2 08 Fe nu aer-2 008 br ry 0 0 u - 8 M ary 200 ar -2 9 ch 00 -2 9 00 9

0 Sensex

5000

5000

10000

15000

20000

25000

10000

15000

20000

25000

Sensex

FII INVESTMENT VS MIDCAP & SMALLCAP INDICES

31

Gross Purchase

Gross Purchase 0 100000 120000 140000 20000 40000 60000 80000

100000

120000

140000

20000

40000

60000

80000

Gross P urchas e

Gross Purchase

Month

Month

FII INVESTM ENT Vs SM ALLCAP

FII IN VESTM EN T Vs M ID CAP

Graph-4

Graph-3

32
Midc ap Index close
2000 4000 6000 Smallcap Index 8000 10000 12000 14000 16000

Smallcap Index close

Ap M ril-2 a Ju y-2005 ne 00 Au Jul - 20 5 Se pt gu y-2 05 e s 0 O m t-2 05 No ctober 00 De vember 20 05 ce be - 20 5 Ja mb r-2 05 Fe nu e r-2 005 br a ry 00 u M ar y - 2005 ar -2 6 c Ap h-2006 0 M ril-2 06 a Ju y-2006 ne 00 Se Au Jul - 20 6 pt gu y-2 06 e s 0 O m t-2 06 No ctober 00 - 6 De vember 20 0 ce be - 20 6 Ja mb r-2 06 Fe nu e r- 006 br a ry 2 0 u - 0 M ary 2006 ar -2 7 c Ap h-2007 0 M ril-2 07 a Ju y-2 007 ne 00 Se Au July- 20 7 pt gu -2 07 e s 0 O m t-2 07 No ctober 00 De vember 20 07 ce b - 20 7 e Ja mb r-2 07 Fe nu e r-2 007 br a ry 00 u M ar y - 2007 ar -2 8 c Ap h-2008 0 M ril-2 08 a Ju y-2 008 ne 00 Se Au July- 20 8 pt gu -2 08 e s 0 O m t-2 08 No ctober 00 - 8 De vember 20 0 ce be - 20 8 m r- 08 Ja b 2 Fe nu e r- 008 br a ry 2 0 u - 0 M ary 2008 ar -2 9 ch 00 -2 9 00 9

Ap M ril-2 Juay-2005 ne 0 Se Au Jul - 200 5 pt gu y-2 05 e s 0 O m t- 0 No ctober 200 5 ve be -20 5 De m r ce b - 2 05 J m e r- 005 Feanube r- 2 00 br a ry 2 0 5 u M ar y - 2005 ar -2 06 c Ap h-2006 M ril-2006 Juay-2006 n 0 Au Jule- 200 6 Se pt gu y-2 06 e s O m t- 00 No ctober 200 6 De vember-20 6 ce b - 2 06 Jamb e r-2006 Fe nu e r- 00 br a ry 2 0 6 u M ar y - 2006 ar -2 07 c Ap h-2007 M ril-2007 Juay-2007 n 0 Se Au Jule- 200 7 pt gu y-2 07 e s 0 O m t- 0 No ctober 200 7 De vember-20 7 ce b - 2 07 Jamb e r-2007 Fe nu e r- 00 br ary 20 7 u M ar y - 2007 ar -2 08 c Ap h-2008 M ril-2008 Juay-2008 n 0 Se Au Jule- 200 8 pt gu y-2 08 e s 0 O m t- 0 No ctober 200 8 De vember-20 8 ce b - 2 08 Jamb e r-2008 Fe nu er- 00 br a ry 2 0 8 u M ary - 2008 ar -2 09 ch 0 -2 09 00 9

2000

4000

Midcap Index

6000

8000

10000

12000

VOLATILITY ANALYSIS

33

Gross Purchases & Sales 100000 120000 140000 20000 40000 60000 80000
A

Gross Purchase Month Gross Sales Midcap Index Smallcap Index

VOLATILITY ANALYSIS

Graph-5
0

pr il20 ay 05 -2 Ju 0 ne 0 5 Ju 200 A ly- 5 S ug 2 0 ep us 0 t e t -2 5 m 0 O ber 0 5 ct o b -20 N o v e 05 e rD mb 200 ec e 5 em r-2 0 Ja be r 05 nu -2 Fe a r 005 br y- 2 ua 00 r 6 M y-2 ar 0 c h 06 A 20 pr 06 ilM 2 00 ay 6 Ju -20 ne 0 6 Ju 200 A ly- 6 ug 2 S ep us 00 te t -2 6 m 0 O ber 0 6 ct -2 N ob 00 o v er -2 6 e D mb 00 ec er 6 em -2 0 Ja be r 06 nu -2 Fe a r 006 br y- 2 ua 0 0 r M y-2 7 ar 0 c h 07 A 20 pr 07 ilM 2 00 ay 7 Ju -20 ne 0 7 Ju 200 A ly- 7 S ugu 2 0 ep 0 te st -2 7 m 00 O ber 7 c -2 N to b 0 0 ov e 7 em r- 2 0 D e c be 07 em r-2 b 0 Ja e r 07 nu -2 0 Fe a r 07 br y- 2 ua 0 0 r M y-2 8 ar 00 ch 8 A 20 pr 08 ilM 2 00 ay 8 Ju 20 ne 0 8 Ju 200 A ly- 8 ug 2 S ep us 00 t e t-2 8 m 0 O ber 0 8 ct -2 N ob 00 ov e 8 e rD mb 200 ec er 8 em -2 0 Ja be r 08 nu -2 Fe a r 008 br y- 2 ua 0 0 r M y-2 9 ar 0 c h 09 -2 00 9

2000

4000

6000

Midcap & Smallcap Index

8000

10000

12000

14000

16000

SCRIPWISE IMPACT OF FII SHAREHOLDING ON PRICE MOVEMENT OF MIDCAP COMPANIES

Percentage Shareholding 50 45 40 35 30 25 20 15 10 5 0
10 20 15 25 30 35 0 5 Quarter Period % shareholding

JSW STEEL LTD.

UNITED PHOSPHORUS LTD.

Quarter Period % shareholding closing price

Graph-6
closing price 0

Graph-7

Ju n Se , 05 p De , 05 c M , 05 ar Ju , 0 6 n Se , 06 p De , 06 c M , 06 ar Ju , 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9
200 400 800 600 1000 1200 1400

Percentage Shareholding Ju n S ,0 ep 5 D , 05 ec M , 05 ar Ju , 0 6 n S ,0 ep 6 D ,0 ec 6 M , 06 ar , Ju 0 7 n S ,0 ep 7 D ,0 ec 7 M , 07 ar Ju , 0 8 n S ,0 ep 8 D ,0 ec 8 M , 08 ar ,0 9

900 800 700 600 500 400 300 200 100 0 Closing Price

Closing Price

Percentage Shareholding
Percentage Shareholding 10 12 14 0 2 4 6 8

45 40 35 30 25 20 15 10 5 0
% shareholding

% shareholding
Quarter Period

COLGATE PALMOLIVE INDIA LTD.

FEDERAL BANK LTD.

Quarter Period

Graph-9
closing price

Graph-8

closing price 400 350 300 250 200 150 100 50 0 Closing Price

Ju n Se , 05 p De , 05 c M , 05 ar Ju , 0 6 n Se , 06 p De , 06 c M , 06 ar Ju , 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9
Ju n , Se 05 p , D 05 ec M , 05 ar , Ju 06 n , Se 06 p De , 0 6 c , M 06 ar , Ju 0 7 n , Se 07 p De , 0 7 c , M 07 ar , Ju 08 n , Se 08 p , De 08 c M , 08 ar ,0 9

500 450 400 350 300 250 200 150 100 50 0 Closing Price

Percentage Shareholding
Percentage Shareholding 50 45 40 35 30 25 20 15 10 5 0

16 14 12 10 8 6 4 2 0

% shareholding
% shareholding Quarter Period
Graph-10

LUPIN LTD.

Quarter Period

JAIN IRRIGATION SYSTEMS LTD.

Graph-11

closing price 0 200 Closing Price 400 600 800 1000 1200

closing price

Ju n Se , 05 p De , 05 c M , 05 ar , Ju 0 6 n Se , 06 p De , 06 c M , 06 ar , Ju 07 n Se , 07 p De , 07 c M , 07 ar , Ju 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9

Ju n Se , 05 p De , 05 c M , 05 ar Ju , 0 6 n Se , 06 p De , 06 c M , 06 ar , Ju 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9

200 100

Closing Price

400 300

600 500

700

Percentage Shareholding

Percentage Shareholding 10 15 20 25 30 0 5

15 10

25 20

35 30

5 0

% shareholding
Graph-12

VOLTAS LTD.

Quarter Period

INDIAN HOTELS COM PANY LTD.

Quarter Periodclosing price % shareholding

Graph-13

closing price 200 Closing Price 400 600 800 1000 1200

Ju n Se , 05 p De , 05 c M , 05 ar Ju , 06 n Se , 0 p 6 De , 0 c 6 M , 06 ar Ju , 07 n Se , 07 p De , 0 c 7 M , 07 ar Ju , 0 8 n Se , 0 p 8 De , 0 c 8 M , 08 ar ,0 9

Ju n Se , 05 p De , 05 c M , 05 ar Ju , 0 6 n Se , 06 p De , 06 c M , 06 ar Ju , 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9

200

400

Closing Price

600

800

1000

1200

1400

1600

Percentage Shareholding

Percentage Shareholding 10 15 20 25 0 5

10

15

20

25

30

35

% shareholding

% shareholding

Quarter Period

TATA TEA LTD.

M PHASIS LTD.

Quarter Period

Graph-15

Graph-14

closing price

closing price 0 50 Closing Price 100 150 200 250 300 350

Ju n Se , 05 p De , 05 c M , 05 ar Ju , 0 6 n Se , 06 p De , 06 c M , 06 ar Ju , 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9

Ju n Se , 05 p De , 05 c M , 05 ar Ju , 0 6 n Se , 06 p De , 06 c M , 06 ar Ju , 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9

1000 900 800 700 600 500 400 300 200 100 0 Closing Price

SCRIPWISE IMPACT OF FII SHAREHOLDING ON PRICE MOVEMENT OF SMALLCAP COMPANIES

Percentage Shareholding
Percentage Shareholding 50 45 40 35 30 25 20 15 10 5 0

10 9 8 7 6 5 4 3 2 1 0

% shareholding
Graph-16

SOUTH INDIAN BANK LTD.

Quarter Period closing price % shareholding

Quarter Period

KESORAM INDUSTRIES LTD.

Graph-17

closing price 0 100 200 Closing Price 300 400 500 600 700

Ju n Se , 05 p De , 05 c M , 05 ar Ju , 0 6 n Se , 06 p De , 06 c M , 06 ar , Ju 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9
Ju n Se , 05 p De , 05 c M , 05 ar Ju , 0 6 n Se , 06 p De , 06 c M , 06 ar Ju , 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9

50

Closing Price

100

150

200

250

Percentage Shareholding 10 12 4 6 8

Percentage Shareholding 40 35 30 25 20 15 10 5 0

% shareholding
Graph-18

% s hareholding

GAM M O N IN D IA LTD .

R AYM ON D LTD .

Quarter Period

Q uarter P eriod

Graph-19

c los ing price Closing Price 200 300 400 500 600

c los ing pric e

Ju n Se , 05 p De , 05 c M , 05 ar Ju , 0 6 n Se , 06 p De , 06 c M , 06 ar Ju , 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9

Ju n Se , 05 p De , 05 c M , 05 ar Ju , 0 6 n Se , 06 p De , 06 c M , 06 ar Ju , 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9

300 200 100 0

700 600 500 400

100

Closing Price

Percentage Shareholding

Percentage Shareholding 100 90 80 70 60 50 40 30 20 10 0

10

20 15

25

30

35

% shareholding
Graph-20

% shareholding

N IIT LTD .

Quarter Period

Quarter Period

UN ITED B REWER IES HOLD IN GS LTD .

Graph-21

closing price Closing Price 400 800 600 1000 1200 1400

closing price

Ju n Se , 05 p De , 05 c M , 05 ar Ju , 0 6 n Se , 06 p De , 06 c M , 06 ar Ju , 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9

Ju n Se , 05 p De , 05 c M , 05 ar Ju , 0 6 n Se , 06 p De , 06 c M , 06 ar Ju , 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9

200

200

Closing Price

400

600

800

1000

1200

Percentage Shareholding
Percentage Shareholding 16 14 12 10 8 6 4 2 0

10

15

20

25

30

35

% shareholding
Graph-22

Quarter Period % shareholding closing price

Quarter Period

BOM BAY DYEING & M ANUFACTURING COM PANY LTD.

M AHIN D R A LIFESPACE D EVELOPER S LTD .

Graph-23

c los ing price Closing Price

Ju n Se , 05 p De , 05 c M , 05 ar Ju , 0 6 n Se , 06 p De , 06 c M , 06 ar Ju , 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9
Ju n S e , 05 p De , 05 c M , 05 ar Ju , 0 6 n S e , 06 p De , 06 c M , 06 ar Ju , 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n S e , 08 p De , 08 c M , 08 ar ,0 9

900 800 700 600 500 400 300 200 100 0

1000 900 800 700 600 500 400 300 200 100 0

Closing Price

Percentage Shareholding

Percentage Shareholding 10 12 14 0 2 4 6 8

9 8 7 6 5 4 3 2 1 0

% shareholding
Graph-24

% s hareholding

Quarter Period

RAIN COM M ODITIES LTD.

Quarter Period

TVS M OTOR COM PAN Y LTD .

Graph-25

closing price Closing Price 100 200 150 250 300 350

c los ing pric e

Ju n Se , 05 p De , 05 c M , 05 ar Ju , 0 6 n Se , 06 p De , 06 c M , 06 ar Ju , 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9

Ju n Se , 05 p De , 05 c M , 05 ar Ju , 0 6 n Se , 06 p De , 06 c M , 06 ar Ju , 0 7 n Se , 07 p De , 07 c M , 07 ar Ju , 0 8 n Se , 08 p De , 08 c M , 08 ar ,0 9

50

160 140 120 100 80 60 40 20 0 Closing Price

REFERENCES
Research Papers: S S S Kumar 'Role of Institutional Investors in Indian Stock Markets' Suresh Babu, M. and Prabheesh, K.P. (2008) Causal relationships between Foreign Institutional Investments and stock returns in India Chakrabarti, R. (2001) FII flows to India: Nature and causes Books: Chopra, C. (2003) Foreign Investment in India Avadhani, V.A. (2004) Securities Analysis and Portfolio Management Websites: http://en.wikipedia.org/wiki/Foreign_Institutional_Investor http://money.rediff.com/indices/bse/bsesmallcap www.bseindia.com www.sebi.gov.in www.moneycontrol.com www.myiris.com www.coolavenues.com