There was a sell-off last year, as FIIs pulled out nearly $8 billion from the corporate and government bond markets in 2013.
India has received around $36 billion worth of capital inflow in the year so far, with the bulk coming over the past three months.
Of this, portfolio investment in debt and equity was $20.4 billion and foreign direct investment around $8.5 billion.
Experts attribute the flows to a mix of higher interest rates in India, cheap capital in developed markets and foreign investors’ preference for high-yielding assets in emerging markets.
“Libor (London interbank offered rate) has fallen to a 40-year low of 0.5 per cent, drastically reducing the cost of taking risk.
"The result is a scramble among foreign investors for riskier but high-yielding assets in emerging markets, including India,” said Deep Narayan Mukherjee, director of ratings at India Ratings.
Capital flows into India were amplified by geopolitical troubles in Ukraine and Russia and concerns about China’s growth rate.
“Capital that would have gone to Russia and China in the normal course found its way into the Indian debt and equity markets, given the size of our economy compared with competing countries like Brazil, Indonesia, South Africa and Turkey,” Mukherjee added.
According to the Securities and Exchange Board of India, FIIs bought shares worth $9.9 billion in 2014, in line with $20 billion invested by them in the same period last year.
Nine companies have together raised nearly $5 billion through bonds abroad, according to Prime Database.
Besides, companies raised around Rs 11,500 crore (approximately $2 billion) through four qualified institutional placements of shares till May, much higher than Rs 8,000 crore (Rs 80 billion) raised through 10 QIPs during all of 2013.
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