Foreign Institutional Investors (FIIs) continued to pump in funds into the Indian equity markets this month despite political and growth worries surrounding Asia's third biggest economy.
In the first two trading sessions of May 2013, foreign investors poured in a mammoth Rs 2,600 crore into the Indian stock market amid hopes that the third interest rate cut this year by the Reserve Bank of India (RBI) may help bolster economic growth.
The RBI on Friday cut its key benchmark repo rate by 25 bps to 7.25 per cent to help bolster credit growth and accelerate economic expansion.
In May thus far, gross equities purchased by FIIs stood at Rs 8,475 crore, while gross equities sold by them were Rs 5,869 crore, resulting in a net inflow of Rs 2,606 crore, data from capital market regulator SEBI showed.
Total FII inflows this year thus far stands at Rs 63,643 crore.
However, profit-booking, worries over a record high current account deficit (CAD) and political uncertainty resulted in a slowdown of FII inflows last month.
FII investment in the Indian equity market fell to the lowest level in 16 months at Rs 5,414 crore in April 2013.
At the same time, growth concerns remain as the RBI warned that it had limited room for further easing to support growth amid high consumer inflation and the elevated CAD.