From January 1-11, Foreign Institutional Investors (FIIs) were gross buyers of shares worth Rs 25,458 crore, while they sold equities amounting to Rs 16,645 crore -- a net inflow of Rs 8,813 crore (USD1.6 billion), according to Sebi data.
In 2012, FIIs had made net investment of Rs 1.28 lakh crore (USD24.4 billion) in Indian equities, making it the second best year for the market after record inflow of Rs 1.33 lakh crore (USD29 billion) in 2010.
Market analysts said overseas investors have stepped up their buying activities after the US Senate passed a 'fiscal cliff' bill that delays the automatic spending cuts by two months and raises taxes on individuals earning more than USD400,000 a year and households making more than USD450,000.
"The huge inflows by FIIs could be attributed to approval of fiscal-cliff deal. Moreover, reform hopes in India would further attract foreign investors," a stock broker said.
There were worries that if US law makers are unable to avert the fiscal cliff issue, it could have pushed the US economy back into recession and caused more sluggishness in the growth pace of the global economy, he added.
However, FIIs have pulled out Rs 261 crore (USD46 million) in the debt market in 2013. This takes the total investment tally into the stock and bond to Rs 8,552 crore.
The strong inflow by FIIs have pushed up the BSE 30-scrip index, Sensex, by 237 points or 1.21 per cent so far the year to settle at 19,663.64 points on Friday.
As on January 11, the number of registered FIIs in the country stood at 1,760 and total number of sub-accounts were 6,358.