Foreign investment flows touch $9.7 bn in Apr-May

The combined flow of foreign direct and portfolio investments into the country for April-May rose to $ 9.74 billion, from $ 7.8 billion in the period a year ago, according to Reserve Bank of India data.

Foreign direct investments (FDI), at $7.78 billion, were many times more than the funds brought in by foreign institutional investors (FIIs). Portfolio investments were just shy of $2-billion mark, at $1.96 billion, in the first two months of 2011-12.

In 2010-11, direct flows in April-May had stood at $4.34 billion. Portfolio investments were lower at $3.4 billion. Portfolio flows were positive in both the months.

In 2011-12, portfolio investments were positive in April, at $3.54 billion, while there was an outflow of $1.58 billion from the Indian capital markets in May.

Analysts said the defensive approach to investments in emerging markets influenced decisions of FIIs. Also, the political uncertainty in the aftermath of action against politicians, senior government officials and top private-sector executives for alleged involvement in telecom and Commonwealth Games scams influenced investment outlook.

Contrary to variations in portfolio investments, direct flows maintained a steady upward flow. FDI stood at $3.12 billion in April and $4.66 billion in May.