After pouring record funds into the Indian equity market during the first three months of 2012, overseas investors seemed to be cautious and have invested Rs 322 crore so far this month.
Foreign Institutional Investors (FIIs) made a net investment of Rs 322 crore in the equity market up to April 13, according to the Securities and Exchange Board of India (SEBI) data.
Net inflows stood at around Rs 44,000 crore during January-March, 2012.
However, in 2011, FIIs mostly stayed away from Indian equities and pulled out over Rs 2,700 crore from the capital market.
Market analysts believe the Government’s anti-tax avoidance rules, GAAR, a proposal in the Budget has been the real dampener for several FIIs, whose clients have used participatory-notes (P-notes) to invest in the Indian market.
Besides, FIIs are also concerned about micro-economic situation in the country, they added.
During the month, foreign fund houses infused Rs 214 crore in the debt market, taking the collective net investments by FIIs in stocks and bonds to Rs 536 crore.
Investment by overseas investors into the Indian stock market since the beginning of 2012 has touched Rs 44,273 crore ($8.9 billion) level, out of which Rs 26,329 crore were pumped in January, Rs 25,212 crore February and the remaining Rs 8,381 crore in March.
The strong FII inflows in January-March was mainly due to reversal in the Reserve Bank of India’s monetary policy stance and subsequent impact of the improved liquidity position.