India has struggled financially since independence, experiencing slow economic growth and economic setbacks due to climatic extremes or political disturbances. The country has been gradually transforming its economic base from agrarian to industrial and commercial. Under British rule in the 19th century, India's cottage industries and thriving trade were virtually destroyed to make way for European manufactured goods, paid for by exports of agricultural products such as cotton, opium, and tea. Beginning in the late 19th century a modern industrial sector and an extensive infrastructure of railways and irrigation works were slowly built with British and Indian capital. Nevertheless, India's economy stagnated during the last 30 or so years of British rule. At independence in 1947 India was desperately poor, with an aging textile industry as its only major industrial sector.
Economic policy after independence emphasized central planning, with the government setting goals for and closely regulating private industry. Self-sufficiency was promoted in order to foster domestic industry and reduce dependence on foreign trade. These efforts produced steady economic growth in the 1950s, but less positive results in the two succeeding decades. By the early 1970s India had achieved its goal of self-sufficiency in food production, although this food was not equally available to all Indians due to skewed distribution and occasional shortfalls in the harvest.
[...] has allowed foreign institutional investors to invest in the securities traded on the primary and secondary markets, including equity shares and other securities listed or to be listed on stock exchange in India. Eligible FIIs can be categorized as pension funds, mutual funds, investments trust, insurance or reinsurance companies, university funds and charitable societies. Further asset management companies and portfolio managers registered with the SEBI can register themselves as FIIs to manage foreign investments in the capital market through the portfolio investment route. [...]
[...] Using stock returns based on the NSE index and net foreign institutional investment flows, there is no evidence to statistically support the positive feedback process. One of the standard models in finance is the capital asset pricing model. Despite its imperfections, it is one of the best tools available to investment managers. From a stock perspective, the implication of this model is that the non diversifiable market risk is the important risk and a stock's riskiness is measured by its vulnerability to market risk. [...]
[...] While foreign investments were never new to Indian Corporate sector, the importance of portfolio investment received special impetus towards the end of 1992 when foreign institutional investors (FIIs) such as Pension Funds, Mutual Funds, Investment Trusts, Asset Mgt companies and Institutional Portfolio managers were permitted to invest directly in the Indian Stock market. Since then though some hick ups came after BSE scam, FIIs went on pumping money in Indian Stock exchanges. A recent analysis by Parthaprathim Pal estimated that at the end of June 2004, FIIs controlled on average 21.6 per cent of shares in Sensex companies. [...]
[...] International institutional investors must register with the Securities and Exchange Board of India to participate in the market. One of the major market regulations pertaining to FIIs involves placing limits on FII ownership in Indian companies. Sub-account includes those foreign corporate, foreign individuals, and institutions, funds or portfolios established or incorporated outside India on whose behalf investments are proposed to be made in India by a FII. Where as FDI (Foreign Direct Investment) is a component of a country's national financial accounts. [...]
[...] However, there were limits to the degree to which foreign institutional investors could participate in local markets, and in Malaysia and Thailand it was not possible for foreign securities brokers to serve as members of stock exchanges because of the restrictions on shareholdings. In Singapore, however, seven companies (four of them Japanese) participate in the stock exchange as international members. There have been a number of surveys of this type conducted but the important feature of this one is that American and European securities brokers occupy the top levels of the rankings. [...]
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