2012 FII Inflows into the Indian Market

Overseas investors have invested about Rs. 14,000 crore into the Indian equity market so far this month and experts expect this positive trend to continue in the future as well.

Since the beginning of 2012, foreign institutional investors (FIIs) have infused a total of Rs. 24,225 crore (US$4 billion) into Indian stocks, after taking into account Rs. 10,358 crore of net inflows during January 2012.

From February 1-17, 2012, FIIs were gross buyers of shares worth Rs. 47,895 crore, while they sold equities amounting to Rs. 34,028 crore, translating into a net investment of Rs. 13,867 crore (US$2.81 billion), according to SEBI.

Market analysts credited strong FII inflows into the domestic market as the reason for the turnaround in the RBI’s monetary policy and the consequent impact of the improved liquidity position.

Foreign funded companies have also infused Rs. 799 crore into the debt market so far this month. This takes the overall net investments by FIIs into Indian markets to Rs. 14,666 crore (US$2.97 billion) for this period. Stock market inflows in the first 17 days of February, at Rs. 13,867 crore, were higher than that for the entire month of January 2012, which stood at Rs. 10,358 crore.

A strong rush in FII inflows in 2012 so far has helped increase the equity markets as well as helped the Indian rupee to strengthen. The stock market indicator Sensex has gained 6.37 percent, or 1096 points, so far in February. The index finished at 18,289.35 on February 17.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing business advisory, tax, accounting, payroll and due diligence services to multinationals investing in China, Hong Kong, India, Singapore, and Vietnam. Established in 1992, the firm is a leading regional practice in Asia with twenty offices in five jurisdictions, employing over 180 business advisory and tax professionals. For professional advice on doing business in India, please contact Dezan Shira & Associates at info@dezshira.com or visit www.dezshira.com.