This paper empirically examines the relationship between trading volume of FII flows and volatility of stock returns. The contemporaneous correlation and asymmetry between NIFTY returns and FII trading volume is studied through OLS. There is evidence for positive contemporaneous correlation...

This article contributes to the debate whether FII trading destabilizes Indian capital market by increasing volatility. Using nine measures of FII trading volume the dynamic relationship between FII activity and the volatility of NIFTY spot index returns is examined in a GARCH/EGARCH framework....