—This paper tests the efficiency of the Indian
Capital Market in its semi-strong form of Efficient Market
Hypothesis (EMH). The efficiency is tested in relation to the
impact of Foreign Institutional Investors (FII’s) largely on the
Indian Capital Market. For the purpose, two major stock
indices viz; National Stock Exchange (NSE) and Bombay
Stock Exchange (BSE) that represent the Indian Capital
Market have been taken. Monthly averages of NSE & BSE and
Monthly FII’s net investment have taken over the period 1st
April 2000 to 30th April 2010 in order to test the efficiency of
Indian Capital Market. Karl-Pearsons’ Product Moment
Correlation Coefficient (Simple Correlation) and linear
regression equations have been used to analyze and determine
the degree and direction of the relationship between the
variables involved. The results suggest that the FII’s do have
significant impact on Indian Capital Market, which leads to
the conclusion that Indian Capital Market is semi-strong form
—Market Efficiency, EMH, NSE, BSE, FII.
Prof. A.Q Khan, Professor in Finance, Accounts and International
Business, Department of Commerce, AMU, Aligarh, India.
Coordinator, PGDPM, Centre for Distance Education (CDE), AMU,
Aligarh. E-mail address: firstname.lastname@example.org
Sana Ikram, Research Scholar, Department of Commerce, AMU,
Aligarh, India. E-mail address: email@example.com
1 Fama, Eugene (1965). "The Behavior of Stock Market Prices". Journal of
Business 38: 34–105.
Cite:Prof. A.Q Khan and Sana Ikram, "Testing Semi-Strong Form of Efficient Market Hypothesis in Relation to the Impact of Foreign Institutional Investors’ (FII’s) Investments on Indian Capital Market," International Journal of Trade, Economics and Finance vol.1, no.4, pp. 373-379, 2010.