Foreign institutional investors (FIIs) infused a record $6.4 billion in October, accounting for nearly one-fourth of the total inflows came in stock market so far this year.
As per the data available with capital market regulator Securities and Exchange Board of India, overseas fund houses were the net buyer of Indian equities worth $6.42 billion (Rs 28,562 crore) during the current month, the highest amount pumped in by the FIIs in any single month.
With this heavy inflow in just one month, the total net investment by FIIs on the local stocks now stands at $24.79 billion (Rs 1.12 lakh crore), the highest in a single year.
Market experts said the inflows of overseas funds will not stop here only as they have the opportunity of the better rate of returns in emerging economies like India. This heavy inflow is causing appreciation in the local currency.
"Capital inflows into the country will be higher in the second-half of the fiscal and the rupee will appreciate up to Rs 43.44 by end-FY 11 from the current Rs 44.60, domestic brokerage Unicon Financial said, quoting, a Crisil report.
Crisil, expects the country's GDP to grow by 8.2 per cent current fiscal and continue with the same momentum for the next decade courtesy the consumption arising out of India's demographics.
However, this heavy inflows in October failed to lift the BSE benchmark Sensex this month. The 30-share index fell 0.2 per cent in October, first monthly drop after May.
Sensex had gained over 10 per cent in the previous month, a period during which FIIs invested a net $5.42 billion (Rs 2,4978 crore). Analysts said the mega Rs 15,000 crore IPO by Coal India was a major reason behind the diversion of foreign funds from secondary market to the primary market.