With foreign investment in Indian stock markets crossing $11 billion so far this year, market experts expect FII ( Foreign Institutional Investors) inflows will continue on a sustained basis in the future amid hopes of government’s initiatives on policy reforms.

FIIs have infused a net amount of $1.02 billion (about Rs.5,692 crore) in August so far, taking the total for this year to $11.4 billion (Rs.57,958 crore) in Indian equities, according to the Securities and Exchange Board of India. According to market analysts, despite a slow economic growth, high interest rate regime and weak monsoon, overseas investors are showcasing confidence in the Indian stock markets amid expectations of the government’s fresh initiatives on policy reforms.

“I think FII inflows will continue in the domestic equity market, given the fact that last year was bad for stocks.

“Also, weakness in the rupee is also favouring overseas investment. But, the biggest trigger is that FIIs are pinning hopes on the government’s fresh initiatives on reforms,” Rajesh Jain EVP Retail Research Religare Securities said.

Geojit BNP Paribas Research Head Alex Matthews said, “FII inflow is likely to continue as hopes of policy reforms announcement are still alive. But, if there are no reforms announcements, there might be slowdown in inflow or could be a pause as well.” Marketmen also said the reason behind the renewed confidence by FIIs in Indian markets is government indicating a soft stance on the controversial General Anti-Avoidance Rules and retrospective taxation issues.

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