Foreign Institutional Investors (FIIs) infused a net amount of $4.31 billion (about Rs 23,035 crore) in Indian equities in February so far, taking the total for the year to $8.4 billion (Rs 45,094 crore).
Market analysts attributed strong FII inflows to signs of RBI easing interest rates and the subsequent impact of improved liquidity position.
Additionally, a slew of measures taken by the government, including the postponement of GAAR (General Anti Avoidance Rules) implementation by two years to April 1, 2016 and partial decontrol in diesel prices, have also attracted foreign investors.
During February 1-22, FIIs were gross buyers of shares worth Rs 65,941 crore, while they sold equities amounting to Rs 42,906 crore, translating into a net investment of Rs 23,035 crore ($4.31 billion), as per Sebi data.
Foreign fund houses also infused Rs 2,242 crore ($415 million) in the debt market in February. This takes the overall net investments by FIIs into debt markets to Rs 25,278 crore ($4.73 million) so far this calendar year.
"FIIs have been betting high on Indian equities for the last six-seven months and reform measures taken by the government has further boosted the sentiment," Wellindia Executive Director Hemant Mamtani said.
"Besides, FIIs have been infusing money into the Indian market on account of change in RBI's monetary policy that have added liquidity to the system. This liquidity will help in growth of the country," he added.
FIIs bought equities worth $24.4 billion in 2012, about $5 billion below record purchases two years ago.
As on February 22, the number of registered FIIs in the country stood at 1,756 and total number of sub-accounts was 6,345.