The economic growth of any country is influenced by well organized financial markets. Indian capital market has seen remarkable volatility in the last few years. Indian stock market is considered to be back bone of an economy of a country. Domestic capital is not adequate to reach the requirement of economy. Foreign investments play a vital role.  The foreign investment flows to Indian economy through two major routes, namely, the Foreign Direct Investment and the Foreign Institutional Investment.  Since liberalization, the Foreign Institutional Investors (FIIs) have started investing in the Indian capital market. FIIs are considered as the biggest movements after the economic fundamentals and  have become a significant driving force of the Indian stock market. The aim of this paper is to establish the relationship between equity investment in FII and variables such as Market capitalization, demat trading, trading value, average daily turnover and internet trading in National Stock Exchange of India  during the period 2000-2018 and the study  also examines the Impact of FII on NSE.  The study is based on secondary source and statistical tools like correlation and regression analysis have been used for data analysis and interpretation to draw meaningful conclusion.

KEY WORDS: Financial Markets, Domestic capital, Foreign Institutional Investments (FIIs), NSE.