On Thursday they net bought in the cash markets to the tune of Rs 600 crores and followed it up with another net buying figure in excess of Rs 600 crores on Friday. Throughout the week they were net buyers in Indian equities.

Their net buying figures are in line with a recovery in global markets this week. Most of the markets ended higher this week with the S&P 500 almost touching a fresh lifetime high.

In the month of Jan 2014, Foreign Institutional Investors made net purchases of Rs 714.30 crores. While net purchases stood at Rs 64,478.90 crores, net sales were Rs 63,764.40 crores for the month of Jan 2014.

Since Sept, foreign funds have made net purchases in Indian equities, making it five straight months in a row.

In fact, in the last few years, FIIs have made staggering purchases in the Indian markets. In the year 2013, they made aggregate net purchases of Rs 112,968.70 crores in the Indian markets, while in 2012, they made aggregate net purchases of Rs 128,360.70 crores.

India has seen robust flows in the last few years ever since the US Federal Reserve decided to begin a QE3 programme. This programme enhanced liquidity in the global financial system and a lot of this liquidity found its way into the Indian stock markets. This was one reason why India received substantial foreign fund inflows in the last couple of years.

However, the trend might change, since the US Federal Reserve has now decided to pull back some of this liquidity.

Also, their investment could be volatile given the elections that are due in the next few months.

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