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Foreign Investors and Global Integration of Emerging Indian Equity Market

Author

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  • Sunil S. Poshakwale

    (Sunil S. Poshakwale, Professor of International Finance, Director, Centre for Research in Economics and Finance, Cranfield School of Management, Cranfield University, Bedford, England. E-mail: sunil.poshakwale@cranfield.ac.uk)

  • Chandra Thapa

    (Chandra Thapa, doctoral student, Centre for Research in Economics and Finance, Cranfield School of Management, Cranfield University, Bedford, England. E-mail: chandra.thapa@cranfield.ac.uk)

Abstract

This article examines the influence of foreign investors in explaining short-run dynamics and long-run relationship of the emerging Indian equity market with global equity markets. Using daily return series and equity portfolio investments made by foreign institutional investors, we conclude that the rapid growth in the flow of foreign equity portfolio investments is leading to greater integration of the Indian equity market with global markets. With the increased global integration, the Indian market will become more susceptible to global shocks as has been witnessed by significant losses suffered by investors in the Indian market following the sub-prime crisis.

Suggested Citation

  • Sunil S. Poshakwale & Chandra Thapa, 2010. "Foreign Investors and Global Integration of Emerging Indian Equity Market," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 9(1), pages 1-24, April.
    • Handle: RePEc:sae:emffin:v:9:y:2010:i:1:p:1-24
    DOI: 10.1177/097265271000900101
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    References listed on IDEAS

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    Cited by:

    1. Sudha Narayanan & Sowmya Dhanaraj & Arun Kumar Gopalaswamy & M. Suresh Babu, "undated". "Trade, Financial Flows and Stock Market Interdependence: Evidence from Asian Markets," Working Papers 2017-158, Madras School of Economics,Chennai,India.
    2. Tung-Hao Lee & Jiun-Kai Huang, 2013. "Financial Liberalization, Foreign Ownership and Corporate Operational Efficiency: The Case of Taiwan Market," Review of Economics & Finance, Better Advances Press, Canada, vol. 3, pages 34-47, August.
    3. Hiremath, Gourishankar S. & Kattuman, Paul, 2017. "Foreign portfolio flows and emerging stock market: Is the midnight bell ringing in India?," Research in International Business and Finance, Elsevier, vol. 42(C), pages 544-558.

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    More about this item

    Keywords

    JEL Classification: G11; JEL Classification: G15; JEL Classification: F12; Foreign portfolio investments; emerging Indian stock market; sub-prime crisis; VEC; cointegration;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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