Signalling their positive outlook on Indian stocks, foreign funds increased their exposure to 29

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Sensex firms, including HDFC, Mahindra & Mahindra and Maruti Suzuki India, in the third quarter ended December, 2012.

Foreign Institutional Investors (FII), a major participant in Indian stock markets, have increased their shareholding in 29 companies of the 30-constituent Sensex in the October- December quarter.

Foreign funds, however, reduced their stake in Hero MotoCorp % during December quarter of the current fiscal in comparison to the preceding (July-September) quarter.

Market analysts said the recent reforms initiatives undertaken by the government to boost economic growth and investor sentiment have infused much-need confidence in FIIs.

"Reforms process initiated by the government last year fuelled a stupendous rally in the stock market. FIIs are investing in India and are of the opinion that the economy is going to reverse for good," Ashika Stock Brokers Head (Research) Paras Bothra said.

During the quarter, the largest increase in FII holding was recorded by housing loan major HDFC. FII stake in HDFC rose from 68.72 per cent in July-September quarter to 73.17 per cent in the three-month quarter ended December 31, 2012.

Overseas holding in Mahindra & Mahindra increased by 2.86 per cent from 30 per cent at the end of September quarter to 32.86 per cent in December quarter.

Auto major Maruti Suzuki saw foreign fund holdings increase to 23.13 per cent in December quarter from 20.45 per cent in the second quarter ended September.

FIIs also hiked their stake in NTPC, Larsen & Toubro, Wipro among others.

In contrast, the foreign holding in Hero MotoCorp reduced to 31.99 per cent from 32.34 per cent in September quarter.

During the quarter, FIIs invested over Rs 45,000 crore in equities pushing the BSE benchmark Sensex upwards by a little over 600 points or 3.2 per cent.