Positive tidings about the Indian economy combined with a fast-growing market have made India an attractive destination for foreign institutional investors (FIIs).

The number of foreign institutional investors (FIIs) registered with the Securities and Exchange Board of India (Sebi) has increased to 1,219 at the end of 2007 as against less than 1000 at the end of 2006. The registered sub-accounts of these FIIs also went up significantly to 3,644.

FIIs showed huge interest in 2007, pumping in the highest ever net investment of US$ 17.2 billion in the equity markets and were instrumental in the BSE and NSE clocking record index levels of over 20,000 and 6,000 respectively. In fact, during the year, FIIs were net buyers in 10 out of 12 months, turning net sellers in the rest primarily to make up the losses on account of the sub-prime crisis in the US.

Out of the total net inflows, a whopping 70 per cent was invested through the instruments of FCCBs, QIPs and IPOs. The remaining 30 per cent was invested through overseas offers, preferential offers and conversion of warrants.

This surge in FII investment has led to the cumulative net investments by FII in to Indian equities to total US$ 66.8 billion by the end of 2007, since December 1993, when FIIs were allowed to enter India.

Simultaneously, the up gradation of India's sovereign ratings combined with the improvement in the macro economic situation and growth fundamentals has led to a near tripling of FII investments in the debt market. Total investment in the country's debt market till November amounted to US$ 1.596 billion as against US$ 487 million in the corresponding period in 2006.

This is a clear index of how bullish this category of investors has been on the prospects of the Indian market.

Some investment highlights:

The Indian growth story has attracted global majors like CLSA, HSBC, Citigroup, Merrill Lynch, Crown Capital, Fidelity, Goldman Sachs, Morgan Stanley, UBS, T Rowe Price International, Capital International and ABN Amro among others to enter the Indian financial market.

• Goldman Sachs and Macquarie have acquired a 20 per cent stake each in PTC India Financial services Ltd.
• Temasek Holdings, Investment Corporation of Dubai, Goldman Sachs, Macquarie, AIF Capital, Citigroup and India Equity Partners (IEP) have picked a combined stake of 10 per cent in Bharti Infratel.
• An entity of Merrill Lynch has picked up 49 per cent stake in seven residential projects of real estate major, DLF.
• Blackstone has taken up a 26 per cent stake in MTAR Technologies.
• Citigroup, Morgan Stanley, Goldman Sachs and BSMA have picked up a combined stake of over seven per cent in Gitanjali Gems.
• Fidelity Investments International has picked up close to seven per cent equity in Transport Corporation of India (TCI).