FOREIGN INSTITUTIONAL INVESTORS

Presented By Roll NoAnkita Kamble 12Arnab Chatterjee 14Ashish Tiwari 15Ashish Murarka 17Ashish Mishra 18

Presented To: Rege Sir

FOREIGN INSTITUTIONAL INVESTORS

FOREIGN INVESTMENT

S IN INDIA

FDI

FII

Management control

√

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…Foundatio

n/ Charitable

Trusts

Asset Manageme

nt Companies

Banks

Insurance

Companies

Hedge Funds

Investment Banking

Unit Investment

Trusts

Investment Trusts

Mutual Funds

Pension Funds

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

FIIFDI VS

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