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Foreign Investors Buy Net 21.3 Billion Rupees of Indian Stocks

Overseas investors bought a net 21.3 billion rupees ($434.6 million) of Indian equities yesterday, the biggest one-day purchase in more than three months.

Foreigners bought 51.2 billion rupees of shares and sold 29.9 billion rupees, the Securities & Exchange Board of India said on its website today. The inflow is the most since Oct. 28 when funds invested a net 23.6 billion rupees, the data show. They bought a net 4.5 million rupees of bonds yesterday.

Offshore funds have bought 152.3 billion rupees of stocks and 165.6 billion rupees of bonds this year after the Reserve Bank of India eased monetary policy, inflation slowed and earnings of some companies beat forecasts. The flows helped the benchmark BSE India Sensitive Index (SENSEX) post its best January gain since 1994 and fueled a record monthly advance in the rupee. They invested 421 billion rupees in bonds last year.

Foreigners have invested 4.596 trillion rupees in stocks and 1.373 trillion rupees in bonds since they were allowed into the country in 1993. Investments in debt increased after Prime Minister Manmohan Singh’s government raised the cap on foreign ownership of local currency bonds by 20 percent to $60 billion in November to stem a slide in the rupee. The currency tumbled 16 percent in 2011, Asia’s worst performer.

India’s $1.2 trillion stock market, Asia’s fifth-biggest, is influenced by flows from overseas. Inflows surged to a record in 2010, making the Sensex the best performer among the world’s top 10 markets. The largest-ever outflow in 2008 led to the biggest annual slump of 52 percent.

Offshore funds pulled out 27.1 billion rupees from local equities last year, compared with record flows of 1.33 trillion rupees in 2010, as Europe’s debt crisis threatened the global economy and cooled demand for emerging-market assets. That led to a 25 percent drop in the Sensex, the second worst annual loss, and sent the rupee to an all-time low.

The regulator provides data on shares bought and sold by large investors, including trades in the primary and secondary markets, with a delay of at least a day.

To contact the reporter on this story: Paresh Jatakia in Mumbai at pareshj@bloomberg.net

To contact the editor responsible for this story: Arijit Ghosh at aghosh@bloomberg.net

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