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Ever since the Indian stock market has been opened to FIIs in 1992, the number of FIIs registered with SEBI has been increasing constantly. Total 1765 FIIs were registered with SEBI at the end of financial year 2011-12. Positive economic outlook of India made India an attractive investment destination for FIIs during 2007-08. In India, FIIs poured highest ever net investment during 2007-08. Consequently, SENSEX and NIFTY jumped to record levels of over 20000 and 6000 respectively. However, FIIs investment trends reversed in the beginning of year 2008. The FIIs have remained net sellers throughout 2008 because of adverse global cues and bankruptcy of US banking system. FIIs have become the single most dominant factor in the Indian equity market with their major share in the total turnover on the BSE and the NSE. Although a few research papers have been published in India covering either trends in the FIIs investment or causes for FIIs flows to emerging economies, no comprehensive study has been conducted covering all the dimensions related to FIIs investment in developing countries like India. It is with this objective in mind that the present study has been undertaken.
