FII Investments in the Indian stock market this year have reached close to the $9-billion mark, of which $ 109 million has been pumped in so far this month.

After pouring hefty funds into the Indian equity market during the first three months of 2012, Foreign Institutional Investors (FIIs) seem to be cautious now and have invested only $109 million (Rs 548 crore) in April.

With the latest infusion, FIIs investment in the country has reached to $8.98 billion (Rs 44,499 crore) in the stock market so far in 2012. Of this, $2 billion was poured in January, $5.12 billion in February and the rest $ 1.68 billion in March.

In 2011, FIIs mostly stayed away from Indian equities and pulled out over Rs 2,700 crore (about $350 million) from the capital market.

Market analysts believe that in the first three months of the year, strong FII inflows were seen mainly due to RBI’s pausing rate hikes and the improving liquidity position.

However, the government’s anti-tax avoidance rule, GAAR, proposal announced in the Budget has been the real dampener for several FIIs whose clients have used participatory-notes (P-notes) to invest in the Indian market, they added.

“The government’s GAAR proposal has been driving away FIIs and causing severe damage to India’s reputation as a high-potential investment destination,” a market analyst said.

During April, foreign fund houses pulled out $35 million (Rs 185 crore) from the debt market and poured in $ 109 million (Rs 548 crore) in the equity market, taking the collective net investments by FIIs in stocks and bonds to $73 million (Rs 363 crore).

FIIs, the main drivers of the markets that gained nearly 13 per cent in the first three month of 2012, have turned negative on equity so far this month.

The BSE 30-scrip barometer Sensex has slipped 0.17 per cent this month till April 20, to close at 17,373.84 points.

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