Foreign investors have turned optimistic on the Indian market and invested a whopping Rs 5,200 crore (about USD 1.16 billion) so far this month in contrast to heavy outflows witnessed in February.
Till March 16, foreign institutional investors (FIIs) have invested Rs 5,232.70 crore (Rs 52.32 billion) in equities and bonds, taking total net inflows in 2011 so far to Rs 7,326.70 crore (Rs 73.26 billion), as per the data available with the Securities and Exchange Board of India (SEBI).
In February, FIIs pulled out a net Rs 3,269.80 crore (Rs 32.69 billion) from the domestic market. In dollar terms, net FII outflows stood at $ 721.33 million.
According to analysts, FII flows gushed after getting positive cues from the 2011-12 Budget. However, at global level, uncertainty prevails on account of factors like the crisis in Middle East and North Africa region (MENA).
Hardening of global commodity prices along with high crude prices are, deterring foreign investors from putting money into emerging markets.
Overseas investors have been gross buyers of equities worth Rs 2,354.10 crore (Rs 23.54 billion) so far this month and infused Rs 2,878.60 crore (Rs 28.78 billion) in the debt market, taking their net investment during the month to Rs 5,232.70 crore (Rs 52.32 billion).
While indicating that positive impact of the Budget 2011-12 is responsible for resurgent foreign inflows, market analysts further predict 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," said SMC Capitals Head of Research, Jagannathan Thunuguntla.
In January, overseas investors were gross buyers of equities worth Rs 79,420 crore (Rs 794.20 billion), but sold shares worth Rs 72,910 crore (Rs 729.10 billion), translating into a net investment of Rs 6,509.60 crore (Rs 65.09 billion), as per the SEBI data.
FIIs have been the gross sellers of equities worth Rs 7,044.40 crore (Rs 70.44 billion) in 2011 so far, but they were bullish on the debt market, with an investment of Rs 14,371.10 crore (Rs 143.71 billion), taking the net investment to Rs 7,326.70 crore (Rs 73.26 billion).
In dollar terms, net FII inflows amount to about $ 1.63 billion in 2011 so far. In 2010, foreign investors bought stocks and bonds valued at nearly Rs 10 lakh crore, a record number in a 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.
