Contagion Effects among Foreign and Domestic Institutional Investors: The Case of the Indian Stock Market-Short Note

Abstract

This article adds to the literature on foreign investors in emerging markets. It dispels the popular notion that foreign and domestic institutional investors are on opposite sides of equity trades. It also finds that the domestic institutional investors are profit takers while foreign investors extend their position in downward markets. Finally, it appears that - at least in the Indian stock market - foreign institutional investors follow the domestic institutional investors in their purchase and sale decisions. JEL codes: G23, G15, F21