FIIs pump Rs 21,000 crore in capital markets till Jan 23

Foreign Institutional Investors (FIIs) have pumped in a whopping over Rs 21,000 crore in domestic capital markets in January 2015 so far, as a result of easing inflation and a rate cut by the Reserve Bank of India (RBI).

Overseas investors have bought shares worth Rs 5,992 crore (US $977 million) till January 23 and debt worth 15,336 crore (US $2.5 billion), taking the total investment to Rs 21,328 crore (US $3.45 billion), latest data with Central Depository Services (CDSL) showed.

Market analysts attributed the huge inflow to low inflation levels and rate cut by RBI. The central bank on January 14 surprised market participants with a 25 basis point cut in repo rate, the rate at which it lends to banks.

These investors got re-christened as Foreign Portfolio Investors (FPIs) in 2014 under a new regulatory regime that promises to make it easier for them to invest in the domestic market.

Besides, foreign investors are betting on domestic capital markets on expectations of further rate cuts by the central bank in its monetary policy review.

In 2014, the net investment by overseas investors into the debt markets stood at Rs 1.16 lakh crore, while in the equities it stood at Rs 98,150 crore. Overall, net investment by foreign investors stood at Rs 2.58 lakh crore in 2014.