Volume 18, No. 6, 2021

FPI & Auto Industry Returns: Lead Lag Relationship

Ms. Neetu Chadha , Dr. Meghna Chhabra


The automobile industry is one such major industry of Indian economy that continuously contributes more than seven percent to India’s GDP every year. This industry experienced downturn in sales and growth and big companies in this industry does enormous job cuts during the year 2019. Regardless of downfall in this sector, foreign portfolio investors in the month of June in 2019 augmented their stakes in few Auto sector stocks. Recently in the year 2021, the Production Linked Incentive (PLI) scheme introduced by Indian Government boosts the economy’s productivity of innovative goods in auto sector and fascinated a lot of investments in this sector. In the current study an attempt has been made to analyse the lead lag relationship of Foreign Portfolio investment (FPI) in Auto sector with returns in this sector by applying Granger's causality test on fortnightly time series data for the historical period of ten years starting from first month of 2011 till last month of the year 2020. This research discovered that FPI flows in Indian Auto sector is triggered by and are fairly elucidated by Auto sector performance and returns which further indicates that strengthening of Auto sector will attract furthermore FPI flows in Auto industry in India.

Pages: 9450-9456


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