Reversing the trend witnessed in the previous month, foreign funds have invested Rs 3,520 crore in Indian stocks and bonds in March so far.
Over the course of the eight trading sessions conducted in March so far, foreign institutional investors (FII) have invested Rs 3,520.20 crore in equities and bonds, taking total net inflows in 2011 so far to Rs 5,614.30 crore, as per data available with the Securities and Exchange Board of India (Sebi).
In February, FIIs pulled out a net Rs 32,69.80 crore from the domestic market. In dollar terms, net FII outflows stood at $721.33 million.
According to analysts, FII flows turned positive after getting positive cues from the 2011-12 Budget.
However, at a global level, uncertainty still prevails on account of factors like the Middle East crisis. Besides, hardening of global commodity prices and crude oil price are deterring foreign investors from putting money into emerging economies.
Overseas investors have been gross buyers of equities worth Rs 1,843.90 crore so far this month, while infusing Rs 1,676.30 crore in the debt market, taking their net investment during the month to Rs 3,520.20 crore.
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Indicating that the positive impact of the Budget 2011-12 is responsible for the resurgent foreign inflows, market analysts predicted that foreign fund houses will keep investing in Indian bourses in the coming days too.
"The FII inflows in March have been strong. This may be because of the better-than-expected Budget," SMC Capitals' Equity Head Jagannathan Thunuguntla said.
In January, overseas investors were gross buyers of equities worth Rs 79,420 crore, but sold shares worth Rs 72,910 crore, translating into a net investment of Rs 6,509.60 crore, as per Sebi data.
FIIs have been the gross sellers of equities worth Rs 7,554.6 crore in 2011 so far, but they were bullish on the debt market, with an investment of Rs 13,168.9 crore, taking their net investment to Rs 5,614.3 crore. In dollar terms, net FII inflows amount to about $1.25 billion in 2011 so far.
In 2010, foreign investors bought stocks and bonds valued at nearly Rs 10 lakh crore, a record for a single year. At the same time, FIIs sold shares and bonds worth Rs 7.8 lakh crore during the year - which implied a record net investment of over Rs 1.75 lakh crore for the year.
In dollar terms, net FII inflows stood at about $39 billion in 2010.