Social implication – The herding and positive feedback trading by FIIs is a cause for concern for government of India, capital market regulator (SEBI), and the country's central bank (RBI) as it adversely affects stock prices and volatility. They are required to formulate and implement a suitable policy response given their objective of protecting the interests of small investors in the market. They may also have to monitor the purchases and sales of equities by FIIs in general and of better performing large cap stocks in particular.
Tayde, M. and Nageswara Rao, S.V.D. (2011), "Do Foreign Institutional Investors (FIIs) Exhibit Herding and Positive Feedback Trading in Indian Stock Markets?", Boubakri, N. and Cosset, J.-C. (Ed.) Institutional Investors in Global Capital Markets (International Finance Review, Vol. 12), Emerald Group Publishing Limited, Bingley, pp. 169-185. https://doi.org/10.1108/S1569-3767(2011)0000012009
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