FIIs, a major participant in Indian stock market, were gross buyers of shares worth Rs 5,94,868 crore and sellers of equities worth Rs 4,91,596 crore. This translated into a net inflow of Rs 1,03,272 crore ($19.78 billion), according to the Sebi data.
This was the second highest net inflow by FIIs in a single calendar year since their entry into Indian capital markets in 1992. In 2010, FIIs had made net investment of Rs 1,33,266 crore ($29 billion at the prevailing forex rates) – the biggest in a calendar year so far.
FIIs had pulled out Rs 2,714 crore in 2011. FIIs have been betting high on the Indian equities in the last few months this year on the back of a slew of reforms initiated by the government, pushing up the broader market Sensex by about 25 per cent so far in 2012.
However, the pace of investment has been slowed. In September, overseas investors had infused Rs 19,261 crore in the stock market, followed by Rs 11,364 crore in October and Rs 9,577 crore in November.
"FIIs continued with the positive bias towards Indian equities as the lack of other investment options make the country an attractive destination. India is still considered as a better market compared to other markets in Asia or emerging markets," Destimoney Securities Sudip Bandhopadhyay said.
"I think India would easily cross $20 billion mark this year," he added.
Kishor Ostwal CMD at CNI Research said, "India has had an excellent year so far after a disastrous 2011. I think Indian valuations look cheaper compared to historical average."
Goldman Sachs recently forecast S&P CNX Nifty Index may climb about 14 per cent by the end of next year and upgrading its recommendation on the Indian stocks to 'overweight' from 'market-weight'. It joined Morgan Stanley and JPMorgan Chase in giving out positive outlook for the country's stocks.
The BSE Sensex may reach 23,069 by December 2013, Morgan Stanley said in a November 26 report. JPMorgan had said Indian stocks are its best bets among BRIC nations next year.
Apart from investing in equities, overseas investors have made a net investment of Rs 33,284 crore ($6.32 billion) in the debt market so far this year. Month-wise, February witnessed a maximum equity infusion by FIIs at Rs 25,212 crore.
However, the number of registered FIIs in the country declined to 1,752 as of November 30, from 1,767 at the end of 2011. But, the silver lining is the total number of sub-accounts has inched up to 6,306 so far in 2012, from 6,278 last year.