Overseas investment into Indian stock markets has crossed $11 billion so far this year, with more than $1 billion being pumped in this month alone.
Foreign Institutional Investors (FIIs) have infused a net amount of $1.02 billion (about Rs 5,692 crore) in August so far, taking the total for this year to $11.4 billion (Rs 57,958 crore) in Indian equities, according to the Securities and Exchange Board of India (Sebi).
Market experts said foreign investors have factored in deficient monsoon, slowing economic growth and high interest rate regime, and are pinning hopes on the government's fresh initiatives on reforms.
"With the government indicating a softer stance on the controversial General Anti-Avoidance Rules (GAAR) and retrospective taxation issues, many FIIs which had stayed away with the Indian equities for some time are once again coming back to India," a stock broker said.
Destimoney Securities MD and CEO Sudip Bandhopadhyay said, "The huge FII inflows were not driven by the country's fundamentals, its mainly because of the global factors such as ECB and the US Federal Reserve. In India, there are some concerns like weak monsoon, slowing economic growth among others."
During August 1-17, FIIs were gross buyers of shares worth Rs 26,363 crore, while they sold equities amounting to Rs 20,670 crore, translating into a net investment of Rs 5,692 crore ($1.02 billion), as per Sebi data.
In addition, FIIs have infused Rs 708 crore in the debt market this month, taking the year-to-date investment to Rs 24,961 crore.
FIIs poured in Rs 10,273 crore in the stock market last month after a pull out of Rs 1,957 crore in the April-June quarter.
The BSE 30-stock index, Sensex, has gained over 14% so far in 2012 and this month alone it has risen 2.63%. It closed at 17,691.08 on Friday.
The number of registered sub-accounts has risen to 6,366 as on August 17 from 6,278 at the end of last year, while the number of registered FIIs has fallen to 1,756 from 1,767 during the same period.