An Empirical Analysis of Stock Price Indices and Foreign Investment in India

Abstract

Foreign investment is a vital ingredient of the globalization of the world economy as it would have larger impact on the domestic financial markets in the short run and real impact in the long- run. Under these circumstances, it may be useful to study the impact of Foreign Investments on the stock market. The stock market is influenced by many factors. Both institutional and individual investors have a critical role to play in the stock market. The volatility in the market is the result of buying and selling pressure on the stocks.   The purpose of this paper to study the impact of foreign investment in developing stock market in India during a period of 2000-2022(Dec2021) and to analyze the causal relationship between foreign investment and stock market in India. The present study is aimed at studying growth of foreign capital inflows in India in the form of foreign direct investment and foreign institutional investment and the influence of foreign investment of India.  This study applies correlation and multiple regression analysis methods to evaluate the relationship between foreign investment and stock market in India.