Adopting a bullish stance on India, overseas investors have pumped in Rs 27,657 crore ($ 5.55 billion) in the Indian equity market so far this year and the experts expect this positive trend to continue further.
In 2012 so far, foreign institutional investors (FIIs) were gross buyers of shares worth Rs 1.14 lakh crore, while they sold equities amounting to Rs 86,998 crore, translating into a net investment of Rs 27,657 crore, as per data available with market regulator Sebi.
During February, the FIIs have infused a total of Rs 17,300 crore ($ 3.51 billion) into Indian stocks and in January they infused Rs 10,358 crore.
Market analysts attributed strong FIIs inflow in the domestic market to the reversal in RBI's monetary policy and the subsequent impact of improved liquidity position.
The foreign fund houses have also infused Rs 17,281 crore in the debt market so far this year.
"FIIs have been infusing money into the Indian market due to change in RBI's monetary policy that has added liquidity to the system. This liquidity will help in growth of the country," Wellindia Executive Director Hemant Mamtani said.
"Indian market will continue to witness inflows in the whole year," he added.
Strong surge in FII inflow in 2012 has helped boost the equity markets as well as helped the Indian rupee to strengthen.
The stock market barometer Sensex gained around 19 per cent this year. The index finished at 17,923.57 on February 24, the last trading session, down by 155 points from its last close.
It is not only India which has witnessed an upsurge in investment, equity funds focused on all emerging markets put together have seen an inflow of over $ 24 billion in 2012.
"In 2012, FIIs infused money into the Indian market mainly on account of easing inflation, a relaxing of foreign investor restrictions and the RBI's policy moves," CNI Research Head Kishor Ostwal said.
FIIs had mostly stayed away from Indian equities in 2011. They flocked toward the debt market in 2011 with a net investment of Rs 20,293 crore, while pulling out Rs 2,812 crore from equities.