Overseas investors poured in nearly Rs 8,000 crore ($2 billion) in the domestic stock and debt markets so far this month and analysts feel that the positive trend will continue in the coming months as well.
Foreign institutional investors (FIIs) purchased equities and debt securities worth a gross amount of Rs 43,994 crore so far this month.
However, they also sold shares and bonds worth Rs 36,195 crore in the same period, resulting into a net investment of Rs 7,799 crore for the period, according to the information available with market regulator SEBI.
Market experts said investors were coming back due to decline in inflation and crude oil prices.
“Investors are coming back to equity market due to cooling inflation and decline in crude oil prices,” CNI Research Head, Mr Kishor Ostwal, said.
FIIs were quite bullish on the equity market as they put in Rs 6,475 crore in equities so far in July and Rs 1,324 crore in securities market.
Investors had shunned the stocks markets in emerging countries such as India in the first half of this year as these countries battled inflation. Besides, high interest rate was also considered as a risk to these countries.
FIIs were interested in the debt market in the first six months of the year, making a net investment of Rs 9,948 crore during the period while their investments in stocks stood at Rs 2,670 crore.
Analysts believe that FIIs will continue to bring more money in the coming six months.
“In the long-term, FIIs will remain bullish on the Indian market. Moreover, in the next six months market will witness more inflows than the last six months,” Geojit BNP Paribas Research Head, Mr Alex Mathews, said.
In 2010, foreign investors purchased stocks and bonds worth Rs 10 lakh crore, a record high for a year. During the same period, FIIs sold shares and bonds worth Rs 7,80,000 crore, which translated into a record net investment of over Rs 1.75 lakh crore for the year.
The number of FIIs registered with SEBI marginally rose from 1,718 as of December 31, 2010, to 1,728 as of July this year.