A Research Project on

Impact of FII: On Money

Market
Guided By Submitted By
Prof. Rekha Acharya Samruddhi Khale
MBA(FS) I Sem
 Introduction
This assignment in a way reveals the dependence
of Indian Money Markets on FII investments. The
project deals with changes in investment trends
in the Indian money market with respect to
changes in policies of government regarding FII
investments, and thereby determines what affects the
Indian economy and how it does so.
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.
 Characteristics of Money Market
Instruments:
 Short-term borrowing
and lending.
 Low credit risk.
 High liquidity.
 High volume of
lending and
borrowing.
 Market volatility leads investors to favor money
market funds:
Reporting Debt/Equity Gross Gross Net Net
Purchases(Rs Sales(Rs Investment Investment
Date Crores) Crores) (Rs Crores) US($) million
01-DEC-2008 Equity 2157.60 1738.20 419.40 104.00
Debt 285.80 0.00 285.80 70.80
02-DEC-2008 Equity 1663.30 1509.40 153.90 38.10
Debt 322.30 573.60 (251.30) (62.30)
03-DEC-2008 Equity 855.90 1175.50 (319.60) (79.20)
Debt 401.90 166.40 235.50 58.40

04-DEC-2008 Equity 875.50 1362.10 (486.60) (120.60)

Debt 174.50 193.60 (19.10) (4.70)
05-DEC-2008 Equity 1779.50 1331.20 448.30 111.10
Debt 897.50 255.70 641.70 159.10
08-DEC-2008 Equity 1182.10 1130.90 51.20 12.70
Debt 151.90 315.70 (163.80) (40.60)
Total for Equity 8513.90 8247.30 266.60 66.10
December Debt 2233.90 1505.00 728.80 180.70
Total for 2008 Equity 698764.90 753235.50 (54470.60) (13502.90)
Debt 41298.10 29424.10 11874.00 2943.50
Grand Total Equity 2843081.40 2614083.70 228997.80 52826.20
Debt 115681.00 87957.60 27723.60 6568.80
 FII sale/purchase activity for the past years on an
annual basis
Date Equity Debt
Gross Gross Sales Net Invest. Gross Gross Sales Net Invest.
Purchase (Rs. Cr) (Rs. Cr) Purchase (Rs. Cr) (Rs. Cr)
(Rs. Cr) (Rs. Cr)

2007 807511.90 737427.9 70084.00 31014.30 21957.30 9057.00

475181.60 438788.50 36393.10 8693.20 5937.30 2755.90

2006
284354.10 237642.20 46711.90 6890.90 12418.00 -5525.10
2005
184608.40 146396.00 38212.40 12478.70 10572.10 1906.60
2004
94122.20 63385.10 30737.10 10956.90 6363.90 4593.00
2003
46854.10 43272.80 3581.30 2970.60 2540.83 429.77
2002
47340.60 34558.30 12752.90 5346.90 4828.30 518.80
2001
74791.50 68421.60 6509.90 2834.80 2735.40 106.00
2000
36395.50 29817.10 6578.10 817.70 698.80 118.60
1999
 Conclusion
 The debt market is often considered to be
a better indicator of the economy than the
equity market.
 During times of economic uncertainty and high
market volatility, investors tend to prefer money
market funds, because they are relatively low
risk and have lower advisory fees than equity
funds.
 Market volatility and falling interest rates in
2007 contributed to a 36% increase in money
market mutual funds.