FII inflow into Indian stocks crosses $7 bn in 2012

The investment by overseas investors into Indian stock market since the beginning of 2012 has crossed $7 billion level, out of which more than $5 billion were pumped in the month of February.

The Foreign Institutional Investors (FIIs) infused a net amount of $5.1 billion (about Rs 25,212 crore) during February, taking the total for 2012 so far to $7.1 billion for the Indian stocks.

Market analysts attributed strong FII inflows to signs of a reversal in RBI's monetary policy and the subsequent impact of improved liquidity position. They expect the positive trend to continue further, given that the liquidity conditions remain strong.

During February, FIIs were gross buyers of shares worth Rs 79,898 crore, while they sold equities amounting to Rs 54,686.6 crore, translating into a net investment of Rs 25,212 crore ($5.12 billion), as per data available with market regulator Sebi.

This is the highest monthly net investment by FIIs in equities since October 2010, where they had infused Rs 28,563 crore.

The foreign fund houses also infused Rs 1,0016 crore ($2 billion) in the debt market last month. This takes the overall net investments by FIIs into debt markets to Rs 25,987 crore ($5 billion) so far this year.

"FIIs have been infusing money into the Indian market due to change in RBI's monetary policy that have added liquidity to the system. This liquidity will help in growth of the country," Wellindia Executive Director Hemant Mamtani said.

"Indian market will continue to witness inflows in the whole year, if the liquidity conditions remain strong," he added.

Strong surge in FII inflows in 2012 so far has helped boost the equity markets, as also the rupee.

The stock market barometer Sensex has gained 15% in 2012, despite a fall of about 3.2% last month. The index finished at 17,752 on February 29.

FIIs had mostly stayed away from Indian equities in 2011. They flocked towards the debt market last year with a net investment of Rs 20,293 crore, while pulling out Rs 2,812 crore from equities.