Investment of FDI and FII in Indian economy or in stock market directly or indirectly affects the growth of economy. The FII contributions have brought change in the development of stock market in India to see the impact of FII on Indian stock market SENSEX and NIFTY have to be considered. Huge amounts of FII fund inflow into the country creates a lot of demand for rupee, and the RBI pumps the amount of Rupee in the market as a result of demand created. FIIs profit from investing in emerging financial stock markets. The FII buying pushes the stocks up and their selling shows the stock market the downward path. This creates problems for the small retail investor, whose fortunes get driven by the actions of the large FIIs.

KEYWORDS:  FII, Indian Stock Market, Indian Economy.