Affirming their faith in the India growth story, foreign fund houses have parked Rs 51,185 crore ($11.1 billion) in domestic stock markets so far this year, more than half of their record investment made in 2009.
An analysis of the data available with the capital market regulator Sebi showed that overseas investors so far in the current year are net buyers of Rs 51,185 crore. They had made a record net purchase of Rs 83,000 crore last year.
Analysts believe that the inflow is expected to continue in coming days also, as India is considered as one of the most favorite destination for FIIs among emerging economies.
"Indian economy is doing well and FIIs are bullish about the domestic markets. Their investment is expected to increase in coming periods," Kotak Mutual Fund Head of Equities Krishna Sanghavi said.
In the past week alone they infused Rs 5,590 crore into local stocks, as per the Sebi data.
With this huge inflow, local markets recovered during the past week and the Sensex made its fresh 2010 highs. On a week- on-week basis, the Sensex went up by about 276 points, or 1.5 per cent, to close at 18,143.99.
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In June and July, FIIs made a total net investment of Rs 27,125 crore.
FIIs play a significant role in domestic equity markets and their movement (inflow and outflow) causes fluctuation in benchmark indices.
FIIs had pumped in a record Rs 83,400 crore in 2009 into the domestic equities, but started exiting in early 2010. In January, they were net sellers of Rs 500 crore.
But from February, the scenario started changing and they were net buyers of Rs 1,216 crore. In April, FIIs were net purchaser of shares worth Rs 9,361 crore, after pumping in a whopping Rs 19,928 crore in March.