|
Determinants
of FII Investment Inflow to India
--
Pushpa
Trivedi and Abhilash Nair
In
the post-liberalization period, FII investments have become
an important component of foreign capital inflows to India.
Over the years, the number of FIIs as well as the magnitude
of investment made by them have increased drastically. Against
this backdrop, this paper tries to investigate the determinants
of FII flows to India, and the causal relationship between
FII investment inflow and the risk-returns in the Indian stock
markets. The results indicate that the returns and volatility
in the Indian markets emerge as the principal determinants
of FII investment inflows. They also indicate that FIIs have
not been looking at the Indian markets as a destination to
diversify their portfolio risk. The authors find a preliminary
evidence of absence of information disadvantage to FIIs in
India.
©
2006 IUP . All Rights Reserved.
Determinants
of Equity Share Prices in the Indian Corporate Sector: An
Empirical Study
-- Shefali
Sharma and Balwinder Singh
This
study examines the empirical relationship of explanatory variables
namely, dividend per share, earnings per share, price-earnings
ratio, book value per share, size, cover, return on capital
employed and payout ratio on the market price of the shares
in the post-reform era. The relationship between independent
and dependent variables of 160 companies is studied over a
period of five years spanning from 2001 to 2005. The results
reveal that earnings per share and book value per share are
important determinants of share price as they are the indices
of healthy financial position of companies. Dividend per share
is an important determinant of share price which shows that
the companies should adopt a liberal dividend policy to activate
the primary as well as secondary market. A high dividend rate
may also help in increasing the market price and result in
high capital appreciation to the shareholders as depicted
by the payout ratio and cover. Price-earnings ratio reflects
investor expectations of growth in a firm's earnings that
vary from industry to industry.
©
2006 IUP . All Rights Reserved.
Relationship
Between Stock Market Liquidity and Volatility at an Aggregate
Level: A Case Study on NSE
--
Som Sankar Sen and Santanu Kumar Ghosh
This
paper explores the relationship between stock market liquidity
and risk by using the information contained in the Open Electronic
Limit Order Book (OELOB) of the National Stock Exchange of
India. It has been found that there is a statistically significant
negative relationship between risk and stock market liquidity,
which is measured by the concept of impact cost. The study
concludes that there is no significant relationship between
liquidity and trading activity in terms of turnover.
©
2006 IUP . All Rights Reserved.
External
Debt Situation in India
--
Hrushikesh Mallick and N R Bhanumurthy
This
paper analyzes the issue of external debt from a macroeconomic
perspective. According to the paper, in India, the external
debt situation does not pose a serious threat to the debt
sustainability of the nation. With an improvement in the current
account balance and increase in the foreign exchange reserves
of the economy, there is a decline in external debt as a percentage
of GDP thus implying a sound external financial management
in the country. The worsening fiscal situation in recent years
has not spilled into the vulnerable external sector. This
implies a better resilience and readiness of the economy compared
to early 1990s, to adjust and avoid any advent of financial
instability arising, due to the changing internal and external
economic environment.
©
2006 IUP . All Rights Reserved.
Price
Discovery in Cash and Futures Market: The Case of S&P
Nifty and Nifty Futures
--
Ash Narayan Sah and Anil Kumar A
One
of the important functions of the futures market is price
discovery. Futures market provides a mechanism through which
information about current and future spot prices can be assimilated
and disseminated to all participants in the economy. The futures
trading in India started with the introduction of index futures
on NSE and BSE in June 2000. This paper examines whether or
not the futures trading in India is performing its primary
role of price discovery. It employs co-integration and error
correction method using data from June 12, 2000 through March
31, 2005. The results establish that there exists a long run
relationship between Nifty spot and Nifty futures prices.
Further, the error correction model leads to the conclusion
that there exists a feedback mechanism between Nifty spot
and Nifty futures.
©
2006 IUP . All Rights Reserved.
|
