Impact of Financial Integration and Foreign Portfolio Investment on Stock Prices-Study of Indian Stock Market and Stock Indices

Abstract

Financial markets in developing countries have become integrated with the rest of the world. This paper seeks to examine the degree of integration of the Indian stock market with the rest of the world. First, it looks at the impact of foreign portfolio investment on stock price movements. Second, an attempt has made to analyse whether the local index numbers showing the fluctuations of stock prices have moved in tandem with the major stock indices in the world.