FOREIGN INSTITUTIONAL

INVESTORS

Presented By Roll
No
Ankita Kamble 12
Arnab Chatterjee 14
Ashish Tiwari 15
Ashish Murarka 17
Ashish Mishra 18
Presented To: Rege Sir
 FOREIGN INSTITUTIONAL INVESTORS

FDI
FOREIGN
INVESTMENTS Management control √
IN INDIA

FII
Management control ×
An institution established/incorporated outside India which proposes to make
investment in Indian financial markets, namely Capital & Debt markets .
Who are these FIIs? ? ?
• ABN Amro
• BNP Paribas
• JP Morgan
• Merill Lynch
• Allianz global
• Bank of America
• CITI group
What are the types of FIIs…
Pension
Foundation/ Funds
Charitable Asset Investment
Trusts Management Banking
Companies

Mutual
Banks Hedge Funds
Funds

Unit Investment
Investment Trusts
Insurance
Trusts
Companies
Participatory Notes
• Participatory notes are instruments used for making investments in the
stock markets

• Participatory notes are not registered with the SEBI to invest in Indian
securities

• Foreign institutional investors (FIIs) and their sub-accounts mostly use

these instruments for facilitating the participation of their overseas clients

• Participatory notes are popular because they provide a high degree of

anonymity, which enables large hedge funds to carry out their operations
without disclosing their identity
FIIs in India
• Entered in 1992
• Why India?
 2nd largest emerging market
 4th largest economy
 Strong macro economic fundamentals of
companies
 Transparent regulatory system
 Lists 6500 companies on BSE
 consolidation

India’s robust financial markets coupled with the prospects

of faster growth propel overseas flow into the markets
- MINT MONEY
Where do FIIs invest…?
• Securities in primary markets and secondary markets

• Units issued by domestic mutual funds

• Dated government securities

• Derivatives

• Debt instrument
Advantages…
• Enhanced flows of equity capital

• Helps improve capital structures and contributes towards building the

investment gap

• Managing uncertainty and controlling risks

• FII inflows help in financial innovation and development of hedging

instruments

• It not only enhances competition in financial markets, but also improves

the alignment of asset prices to fundamentals
Contd..
• Improving capital markets

• FIIs enhance competition and efficiency of financial markets

• Equity market development aids economic development

• FIIs constitute professional financial analysts, who contribute to better

understanding of firms’ operations

• Improve corporate governance

FDI VS FII
FDI vs FII
• Nature of investment

• Hot money

• Entry and Exit

• Money to be invested in

• Production and Employment

Disadvantages..

• Problems of Inflation

• Problems for Small Investor

• Adverse impact on Exports

• Hot Money

• Fluctuations in Exchange Rate

“I am convinced that the Indian banking
regulators will take all necessary steps to
prevent the economy from over-heating.
But to prick a bubble in asset prices, the
regulator needs to raise interest rates,
which in turn increase the flow of foreign
capital & put pressure on local currency.”

- Sir Thomas Harris (Vice Chairman, Standard

Chartered Capital Markets Ltd.)
FIIs are raising stakes…
• FIIs are rebuilding their portfolio after emerging from the global crisis
• They had sold Indian stocks and took money out to meet redemption
pressure in their home countries

IMPLICATIONS:
• FII inflows are expected to grow
• Investors’ optimism and ROI expected to increase
• Almost 2/3 of the companies have reported increase FII investments
Thank You