FIIs remain invested in Indian equities despite Fed’s planned liquidity squeeze

Foreign institutional investors (FIIs) have poured Rs1,009 crore into the Indian equity market so far in January while they invested another Rs1,746 crore in the debt market, taking their total investment in Indian securities to Rs2,755 crore.

FIIs bought shares worth Rs4,157 crore and sold equities worth Rs3,148 crore till 3 January, resulting in a net inflow of Rs1,009 crore ($163 million), according to data released by market regulator Securities and Exchange Board of India (SEBI).

FIIs also invested Rs1,746 crore in the debt market, taking their total investment in the debt and equity markets to about Rs2,755 crore.

FIIs, the mainstay of Indian stock markets, infused a net Rs1,13,000 crore ($20.10 billion) in equities last year, against a net investment of Rs1,30,000 crore ($24 billion) in equities in 2012.

The number of SEBI-registered FIIs in the country stood at 1,738 while their sub accounts totalled 6,392 as of 3 January.

Markets were expecting a tapering of foreign investments in Indian equities in the backdrop of the US Federal Reserve's scheduled reduction in its monthly bond purchases by $10 billion beginning January.

The US Federal Reserve decided to cut its bond purchases to $75 billion from $85 billion, according to a statement issued after the Federal Open Market Committee meeting on 18 December.

The Reserve bank of India and the finance ministry have, however, ruled out any major impact on the domestic markets by the reduction in US bond-buying programme.

Finance minister P Chidambaram had also asserted that India is better prepared to deal with the impact of the US stimulus withdrawal.