From January 1-18, foreign institutional investors (FIIs) were gross buyers of shares worth Rs 42,926 crore, while they sold equities amounting to Rs 29,525 crore translating into a net inflow of Rs 13,401 crore ($2.5 billion), according to Sebi data.
In 2012, FIIs had made net investment of Rs 1.28 lakh crore ($24.4 billion) in Indian equities, making it the second best year for the market after record inflow of Rs 1.33 lakh crore ($29 billion) in 2010.
Market analysts attributed huge inflows into Indian equities to steps taken by the government including the postponement of the implementation of the GAAR by two years to April 1, 2016 and partial decontrol in diesel prices.
Another major reason was passage of 'fiscal cliff' bill by the US Senate that delays the automatic spending cuts by two months and proposed raising of taxes on individuals earning more than $400,000 a year and households making more than $450,000.
However, FIIs have pulled out Rs 563 crore ($101 million) in the debt market in 2013. This takes the total investment tally into the stock and bond to Rs 12,838 crore ($2.34 billion)
The strong inflow by FIIs have pushed up Sensex by 612 points, or 3.15 per cent, so far in the year to settle at above 20,000 mark on Friday.
As on January 18, the number of registered FIIs in the country stood at 1,759 and total number of sub-accounts were 6,315.