The previous day they net bought to the tune of around Rs 500 crores, even as domestic institutions again pressed sales.
Foreign funds have been a little more upbeat since Governor Raghuram Rajan took charge of the RBI, which has seen the rupee appreciate steadily and the stock markets rise substantially.
In fact, the Nifty has gained almost 1000 points in the last fortnight or so. The rupee has also gained substantially to the current levels of 61.77 to the dollar, after dropping from levels of 68.81 to the dollar.
The Fed decision to keep its tapering on hold fuelled FII buying on Thursday and if the RBI loosens its monetary policy today, we might see fresh buying once again in trade. The markets are expecting that the RBI would cut the marginal standing facility for banks. Some banks which depend on wholesale funding are likely to be the major beneficiaries of such a move.
Inflows from foreign funds is also likely to continue as long as the rupee remains steady against the dollar. The government has also to undertake more structural reforms to enable further inflows from FIIs..