Overseas investors pumped nearly Rs 17,000 crore into the Indian market, including stocks and bonds, in the first six months of 2011 and analysts feel the positive trend will continue in the coming months as well.
Between January and June this year, foreign institutional investors (FIIs ) purchased equities and debt securities worth a gross amount of Rs 46,9511 crore. However, they also sold shares and bonds worth Rs 45,2731 crore in the same period, translating into a net investment of Rs 16,780 crore for the period, according to information available with market regulator Sebi.
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Investors were more bullish on the debt market in the first six months of the year, making a net investment of Rs 9,948 crore during the period, while their investment in stocks stood at Rs 2,670.4 crore.
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However, the scenario seems to be changing, as their focus shifted to equity investment in the first few days of trading in the second half of the year.
Foreign investors have poured Rs 8,947 crore into the stock market in the past one week and pulled out Rs 2,324 crore from the debt market in the same period.
"In the first six months, FIIs have not invested much in the Indian stock market because of soaring food prices and hardening of interest and instead preferred debt market, as it has given better returns to them," CNI Research Head Kishor Ostwal said.
Ostwal further said the situation has been improving in the last few trading sessions, as investors are again coming back to the equity market due to cooling inflation and a decline in crude oil prices.
Market experts believe that FIIs will bring more money in the coming six months.
"In the long-term, FIIs will remain bullish on the Indian market. Moreover, in the next six months, the market will witness more inflows than the last six months," Geojit BNP Paribas Research Head Alex Mathews said.
He further said the government has increased the prices of diesel and LPG, which spells well for its reforms agenda.
In 2010, foreign investors purchased stocks and bonds worth Rs 10 lakh crore, a record high for a year. During the same period, FIIs sold shares and bonds worth Rs 7,80,000 crore, which translated into a record net investment of over Rs 1.75 lakh crore for the year.
The number of FIIs registered with Sebi marginally increased from 1,718 as on December 31, 2010, to 1,728 as of July this year. Besides, the number of registered sub-accounts has climbed from 5,503 in December 31, 2010, to 5,908 sub-accounts as of July, 2011.