Impact of Institutional Investors on Indian Stock Market Performance

ABSTRACT

The paper analyzes the impact of Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs), as these are the two primary institutions on which the Indian stock market is dependent. The research design and statistical tools used in the study are Vector Error Correction Model (VECM), Granger Causality, Variance Decomposition Analysis, and Impulse Response Function. During the Covid-19 pandemic, high volatility was witnessed in the global markets, so it is important to evaluate the behavior of the Indian stock market with respect to the inflows and outflows of institutional investors on a daily basis. The paper concludes that Indian stock market return (Nifty 50) has more significant impact on FIIs, as compared to DIIs (mutual funds).