The paper tries to identify the presence of 'market-wide herding' in the Indian capital market and whether Institutional Investors impact such Herding. In particular, the paper looks at the impact of FII Flows as well as mutual funds on herding. The work also looks at the the impact of index return and volatility on herding.   The Indian economy embarked on a process of liberalisation in 1992 and since then the Indian capital markets have been on a process of integration with the global markets. Over the last decade, India has attracted investments from Foreign Institutional Investors (FIIs) from across the world, the initial trickle ballooning into a torrent. Fund mobilisation by domestic institutional investors like Mutual Funds (MFs) has been increasing in view of the increasing rate. Like any other developing economy, the Indian capital markets have welcomed institutional investors as they provide the much-needed liquidity for the markets; however, the increased role of the institutional investor, particularly the FII has also lead to a rise in negative perceptions about their impact on the markets.  The issue of stability of the financial markets thus gained prominence.