Indian economic scenario has changed rapidly since 1990s and is changing even more rapidly with the day. With the increased foreign linkages of the Indian economy, through FIIs, FDIs, M & As, and instruments like participatory notes etc. there has been an increase in the market volatility.

This detailed report maintains following heads:-

1.     Introduction

2.     Foreign Investment in India V/S Foreign Direct Investments

3.     Project proposed

4.     Objectives

5.     Methodology

6.     Literature Review

7.     Benefits Of FIIs

8.     Cost of FIIs

9.     Linkages with Exchange Rates, Interest rates & Balance of Payments

10.   Influence of FIIs on the Indian Stock Market

11.   Quantitative data

• Major intraday collapses in BSE sensex
• Net investment of FII from 1990-08

12.   The dark side of FIIs.

13.   Participatory notes

14.   Recommendations

15.   Conclusion

16.   Encouraging FII flows

17.   Vulnerability to FII flows

18.   Appendix

19.   References

Consistent with the recommendations of the Financial Action Task Force (FATF), it must be ensured that only clean money through recognized banking channels is permitted in the securities market. There should be a negative list of tax havens, whereby entities registered in these jurisdictions are prevented from attaining FII status.