How Do Extreme Global Shocks Affect Foreign Portfolio Investment? An Event Study for India

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractForeign portfolio flows in and out of India are relevant for policymakers, and are often portrayed in the media as having a destabilizing effect on the domestic market. We use an event study approach to examine whether extreme global shocks trigger abnormal responses in foreign equity flows in and out of India, or abnormal responses in the Indian stock market. We do not find strong evidence of abnormal responses, even for the case of the global crisis of 2008.# We are grateful to the International Growth Centre for financial support. Neither institution is responsible for the views expressed here. We are also grateful to Suman Bery, Tarun Ramadorai, Subir Gokarn and seminar participants at IGC, UCSC and Stanford for comments on related work. We especially wish to acknowledge the contributions of Vimal Balasubramaniam, who did significant initial data analysis, and Ila Patnaik and Ajay Shah, who provided intellectual guidance at many points. However, the authors are solely responsible for all errors and omissions.

Asymmetric Effects of Exchange Rate and Its Relationship with Foreign Investments: A Case of Indian Stock Market

“…The current set of study focuses on the GFC's impact on FIIs and stock market. Yaha, Singh, and Rabanal (2017) using daily observations from 1999 to 2011 examined any significant evidence of abnormal responses in foreign equity flows and in stock market returns in the eve of global shocks. No evidence of abnormal responses could be traced in either of the two due to global shocks.…”