FIIs pump `16,500 cr in Indian capital markets in Feb

Foreign investors have poured in a little over Rs 16,500 crore in Indian capital markets in this month so far on hopes of a pro-growth Budget and rising expectations that government will accelerate reforms.

The latest inflows take the total investment to Rs 50,205 crore (USD 8.2 billion) since the beginning of 2015. In January, overseas investors had pumped in Rs 33,688 crore in Indian debt and equities.

Foreign institutional investors (FIIs) have bought shares worth Rs 6,850 crore in February so far. In the debt segment, they invested funds to the tune of Rs 9,667 crore, taking the total investment to Rs 16,516 crore, the Central Depository Services' data showed. FIIs were rechristened as foreign portfolio investors or FPIs last year under a new regulatory regime that promises to make it easier for them to invest in India.

Market participants attributed the robust inflows to positive investor sentiment driven by the government's announcement of several reform measures in recent months and expectation of more announcements in the Union Budget, to be presented on February 28. 

Investors are keenly focused on the new government's first full-year Budget, looking at it as a gauge to measure the government's reform momentum. "The upcoming Budget could be the most important one for the stock market after the early 1990s, when India launched economic liberalisation," Morgan Stanley said in a report.

Of the total inflows, a lion's share came into debt markets, which analysts attributed to measures taken by Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi) to attract long-term overseas investors.

In 2014, the net investment by overseas investors in debt markets was Rs 1.59 lakh crore, while the figure for equities stood at Rs 97,054 crore. Overall net investment by foreign investors stood at Rs 2.56 lakh crore last year.