been key drivers of the Indian stock story in 2012, even as domestic heavyweights such as a LIC choose to take a contrarian view and book profits, are likely to stay invested in India in the coming months and the level of optimism among is projected to spill over into 2013. According to data from Standard Chartered, Asia is likely to see foreign inflows of $42 billion in 2013. While gains are broadly expected across emerging economies in the region, the bank is betting on India, along with Philippines and Thailand, to be 2013’s star performers, each offering returns of 15 per cent next year. In the next year, the bank forecasts that stocks will get a boost from interest rate cuts by the Reserve Bank of India, which will reduce the cost of capital and support investment growth, and from easing inflationary pressures — a positive for profit margins.
According to Sebi data, the net investment by FIIs during 2012 (updated till December 14) was $22.22 billion (Rs 1,16,550 crore), making this the second highest net inflow in a single calendar year since foreign investors were allowed into the Indian capital markets in 1992. In 2012, FIIs had pulled out $358 million (Rs 2,714 crore). The FII push has ensured that the BSE benchmark Sensex shot up by 3,862 points or 25 per cent during the current calendar year.
FII inflows were clearly helped by the flurry of policy initiatives announced by the Government post-September and newer measures,