According to the latest figures of the Reserve Bank of India monthly bulletin for August, NRIs have stepped up their investments in Indian equity shares over the last five months (January-May). During this period, NRIs had invested $261 million or a little over Rs 1,000 crore in shares acquired through both the primary and secondary market.

During May 1999, offshore funds floated by Indian asset management companies have also invested $57 million as against a meagre $5 million (Rs 21 crore in the first four month of the current calendar). The offshore funds, which were inactive for almost a year with hardly any investments in the domestic market, had pumped in a meagre $59 million during 1998-99.

According to analysts, most of the purchases by NRIs could have come from the secondary market, which turned attractive over the last six months, as there were hardly any public issues during the period. The significant rise in secondary market investments is in line with substantial investments by the foreign institutional investors (FIIs) witnessed during the last six months. Total investments by FIIs during April-May'99 increased to $800 million (Rs 3,440 crore). The first eight months of 1998-99 had seen withdrawal of funds by FIIS from the Indian markets to the tune of $791 million (Rs 3,322 crore). The resurgence of foreign portfolio investments led by (FIIs) began soon after the BJP-led coalition government fell in May this year.

With the revival of the investments in the stock market, the BSE Sensex scaled past its all-time high of 4,645 in September'94. The buoyancy has been sustained for almost four months in this calendar year with FII investments turning positive on the Indian markets.

Acquisition of shares of Indian companies by NRIs is in keeping with section 29 of the Foreign Exchange Regulation Act - 1973 (Fera). Section 29 (1) (b) of Fera states that NRIs can acquire whole or any part of any undertaking in India of any person or company carrying on any trade, commerce or industry or purchase the shares in India of any company after obtaining permission from the Reserve Bank. This section also enable NRIs to acquire shares from the Indian primary and secondary markets.