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Overseas investors have pumped in a staggering amount of over Rs 1 lakh crore into the Indian stock market since the beginning of the year, primarily on account of government’s reform agenda.
As per the latest market data, foreign investors have purchased equities worth Rs 9.60 lakh crore in 2014 so far, while they offloaded stocks to the tune of Rs 8.6 lakh crore during the same period, resulting into a net inflow of Rs 1 lakh crore ($16.57 billion).
These huge inflows included a net investment of Rs 4,032 crore so far in December itself.
While foreign investment in the equity market exceeded Rs 1 lakh crore mark in the past two years also, almost a month is still left in 2014 and the final tally for this year may be much higher.
According to market experts, improved fundamentals of the Indian economy, a decisive mandate to the BJP-led NDA at the Centre, and various reform measures announced by the government have caught the fancy of overseas investors (foreign institutional investors, sub-accounts and foreign portfolio investors).
They said that the global interest rate situation will be a key factor for future flows into India along with domestic growth indicators.
However, the inflow is significantly higher in debt compared to equities. Till date, it has attracted Rs 1.55 lakh crore ($25.6 billion).
Total net investment by foreign investors (debt and equity segments) into India so far this year have reached Rs 2.55 lakh crore ($42 billion).
Foreign investors had put in Rs 1.13 lakh crore in the country’s equity market during 2013 and Rs 1.28 lakh crore in 2012. Moreover, overseas investors had made a record net investment of Rs 1.33 lakh crore in 2010.
The strong inflows have helped push the BSE index Sensex by about 27 per cent so far this year.
Since the beginning of June, Foreign Institutional Investors (FIIs) along with sub-accounts and qualified foreign investors have been clubbed together by market regulator SEBI to create a new investor category called Foreign Portfolio Investors (FPIs).
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