The present study is aimed to identify the major parameters that form basis for Mutual Funds’ trading decisions. As macroeconomic variables like GDP, Exchange rate, Inflation rate etc. play insignificant role in trading decisions of Domestic Institutional Investors (DIIs) because DIIs have no other option than Domestic Financial markets to invest their funds unlike Foreign Institutional Investors. Thus, the current paper is also focused to examine the association between Mutual Funds’ trading activities, Foreign Institutional Investors’ trading activities and Domestic Stock Market position. The researcher has selected VECM and Granger causality test for verifying the presence of causal link among Mutual Fund’ trading activities, Foreign Institutional Investors’ trading activities and S&P BSE Sensex returns during January1, 2001 to December 31, 2019. The results have evidenced the existence of casual relation among the Mutual Funds’ sales activities, Foreign Institutional Investors’ trading activities and S&P BSE Sensex in the long run.
Volume 12 | 04-Special Issue