Betting high on India's reform initiatives, foreign investors have pumped in more than Rs 9,000 crore (about $1.67 billion) in the country's equity market so far this month.
Analysts expect inflows will continue in the coming months as well.
Foreign Institutional Investors (FIIs) investment in the country's equity market has reached to Rs 72,215 crore ($13.97 billion) so far in 2012.
Market analysts believe that huge inflows was mainly on account of recent big-ticket announcements by government, including operationalisation of 51 per cent FDI in multi-brand retail, allowing foreign carriers to buy up to 49 per cent stake in domestic airlines.
Further, liberalisation of the broadcasting sector would prove as major sentiment lifter for foreign investors, they added.
"FIIs inflows was driven by policy reforms announced by the government last week and I think they will continue to invest in the domestic equity market in next six to eight months as well," Wellindia Vice President Research Vivek Negi said.
"We hope that government would continue with its reform initiatives in other sector, he added.
During September 1-21, FIIs were gross buyers of shares worth Rs 39,037 crore, while they sold equities amounting to Rs 29,892 crore, translating into a net investment of Rs 9,145 crore, according to data available with the market regulator Sebi.
Apart from equities, FIIs also invested Rs 909 crore in the debt market during the period under review.
Geojit BNP Paribas Research Head Alex Mathews said foreign investors have sidelined the concerns of sluggishness in the economy and high interest rates. They have shown faith in the Indian equity market and invested heavily on government's fresh initiatives on policy reforms, he added.
"FIIs have also got support from easing of monetary policy by the US Federal Reserve and they also cheered the decision of hike in diesel prices," Negi added.
Buoyed by strong FII inflows, the BSE benchmark index, Sensex, surged 288 points over 1.56 per cent so far this month to close at 18,752.83 points on Friday.
Taking the latest inflows into account, FIIs have infused a net amount of Rs 72,215 crore (about $13.97 billion) so far this year and Rs 25,427 crore into the debt market during the same period.
As on September 21, the number of registered FIIs in the country stood at 1,754 and total number of sub-accounts were 6,343 during the same period.