Foreign Direct Investment and Capital Market: A study of FDI and Indian Stock Market

Abstract

The role of Foreign Direct Investment in the economic development of any economy be it a developed nation or a developing nation is very crucial. Particularly after the adoption of the policy of globalization the FDI has become the major attribute for the development of developing economy like India. Indian government is playing a vital role in drafting policies and easing the process of inviting FDI’s to ensure investment in the country. This paper will attempt to study the relationship between FDI and Indian Stock market. Statistical tools have been used to understand the relationship of FDI and the stock market. Such tools include the correlation, regression analysis. Data of last 18 years suggests that FDI has direct impact on both the stock market indicators BSE Sensex and Nifty.

Keywords:Sensex, Nifty, FDI, Capital Market, Stock Market, Index