The week preceding Diwali, benchmark index Sensex touched an all-time high and there is expectation that the index will cross levels of 22,000 by January 2014. Among investment avenues available to retail investors, equity offers the maximum returns, despite the risk.

For the uninitiated, on a five-year term, you can expect to earn anything between 9-12% annualised returns from Indian equity markets. So, as an overseas Indian , if you haven't taken advantage of Indian equity markets, it is time to consider doing so.

Non-resident Indians can invest in equity either through the primary or the secondary market. You can invest in the primary market through Initial Public Offerings, a Follow-on Public Offer, and so on, and the secondary market through a Portfolio Investment Scheme (PIS).

PIS allows overseas Indians to buy shares or debentures of companies listed on Indian stock exchanges. You can start investing as soon as you open a PIS account, for which the bank will require your Permanent Account Number (PAN).

You can apply for a PIS account either directly from a bank or through a brokerage firm. Most leading brokerage firms have tie-ups with banks and can help you with the process. OIFC has partners who can assist you in investing in stocks in India.

An ideal investment portfolio would involve a mix of short-term and long-term instruments, in varying degrees of risk-return combinations. Besides equity markets, there are other investment avenues for overseas Indian investors. In earlier columns, I spoke of real estate and pension funds. Both these are longterm investment instruments.

Term deposits are another favourite among overseas Indians. They have become even more attractive now. Among the various deposit schemes for overseas Indians, term deposits are available through the Foreign Currency Non-resident (Bank), or FCNR (B), scheme.

FCNR deposits provide NRIs and Persons of Indian Origin (PIO) an investment avenue that saves them from currency volatility. You invest in a foreign currency and the interest earned is tax free.

The rush for FCNR deposits started early September, when India's central bank announced a swap deal on FCNR deposits for banks. This deal allows banks a forward premium of 3.5% per annum for funds received by the bank under FCNR deposits for a minimum of three years between September and November 2013.

This measure was announced by the Reserve Bank of India to increase inflow of the dollar. Typically, banks would pay a forward premium of 7% per annum. This swap deal window allows banks to save significantly on currency hedging costs.