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How has the correlation between FII and DII resulted in a positive trend in Indian stock markets in spite of lower GDP; catalyzing the markets to rise?

Khatun, Mosammat Gulsanara (2022): How has the correlation between FII and DII resulted in a positive trend in Indian stock markets in spite of lower GDP; catalyzing the markets to rise?

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Abstract

The investment that is occurred by organizations or institutions like mutual funds, hedge funds, insurance companies and more in the real or financial assets of a country is commonly known as Institutional Investor. It is generally of two types: Foreign Institutional Investor (FII) & Domestic Institutional Investor (DII). The stock markets are usually agitated by FII & DII because of their money power. This study aims to find out the correlation between FII & DII and how it resulted in a positive trend in Indian stock markets, inspite of lower GDP. The study is conducted on the monthly time-series data of purchases and sales of FIIs and DIIs since April 2011 till March 2021. The study has taken the monthly values of BSE Sensex as proxy for stock market behavior. It is found that FII and DII act as catalysts to the Indian stock markets positively and when FII moves up, DII goes down and when FII goes down, DII moves up.

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