Foreign investment in Indian capital markets touches $2 bn in December

Foreign investors have put in $2 billion in the Indian capital markets in December till date, taking this year's total inflows to a whopping $42 billion since January, latest data showed.

Net investment by overseas investors into Indian equities stood at $116 million (Rs.553 crore) during Dec 1-26, while total inflows into the debt market for the period were $1.94 billion (Rs.12,065 crore).

The debt market attracted most of the funds this month, and investment in equities was just $116 million.

Foreign Portfolio Investors (FPIs) have invested heavily into the debt market with an exposure of $$26.4 billion, while $16.40 billion have been poured into the equities markets.

Encouraged by recent government-backed reforms and the hope of a strong revival in India's growth, foreign investors have pumped in more than $42.44 billion (Rs.256,000 crore) into the Indian equities and debt markets.

The foreign institutional investors (FIIs) along with sub-accounts and qualified foreign investors have been clubbed together by market regulator Securities and Exchange Board of India (SEBI) to create a new investor category called FPIs.

This is the first time after 2010 that the country has witnessed such a robust in-bound flow. In 2010, India attracted a net investment of $39.38 billion.

This year, the mark was overtaken even before the year ended. With strong fundamentals and expectations of more reforms, the foreign investors have been attracted to the Indian markets.