(a) whether there has been a spurt in the Indian stock markets from Foreign Institutional
Investors (FIIs) based in Gulf countries;
(b) whether they have any bearing on stability of stock market; and
(c) if so, the reaction of the Government thereto?
MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PAWAN KUMAR BANSAL)
(a) Yes, Sir. There has been an increase in the number of FIIs/sub-accounts based in Gulf
countries, viz. Kuwait, Oman, United Arab Emirates, Saudi Arabia and Qatar, engaged in the
Indian stock markets and their net investments over the period 2005 to 2007.
(b) and (c): The stock market is dynamic in nature and the market movement is influenced by
demand and supply interplays as well as a host of other factors.The movement in stock market
indices is a function of perception of the economy or a sector or of index stocks. It also
depends on economic factors, domestic and international events, market sentiments, level of
floating stock available, corporate performance and future economic growth. The stock market
capitalizes the present and future values of growth opportunities while evaluating the growth
of all sectors in economy. The FIIs, cannot, therefore, be said to have any bearing on stability
of the stock market.