Overseas investors have poured in over Rs 8,500 crore (about USD 1.4 billion) in the equity market this month amid expectations the BJP's victories in state assembly polls have brightened the party's prospects in next year's Lok Sabha elections.
Foreign institutional investors (FIIs), the major participants in the Indian stock market, were gross buyers of shares worth Rs 32,163 crore and sellers of equities worth Rs 23,608 crore till December 13, resulting in a net inflow of about Rs 8,555 crore, according to Sebi data.
So far in 2013, FIIs have invested Rs 1.05 lakh crore (USD 18.9 billion) in the domestic stock market.
Analysts said the assembly poll results in Rajasthan, Madhya Pradesh, Chhattisgarh and Delhi sparked optimism about the Bharatiya Janata Party's chances in the 2014 general elections.
Some experts believe BJP prime ministerial candidate Narendra Modi's position has been strengthened. They expect a BJP-led government would be more pro-reform and speed up legislative steps needed to spur economic growth.
The BJP secured landslide wins in Rajasthan and Madhya Pradesh, retained power in Chhattisgarh and was just short of a majority in Delhi.
However, overseas investors have pulled out a net Rs 3,795 crore from the debt market so far this month. Since the beginning of 2013, they have withdrawn Rs 52,343 crore.
As of December 13, the number of registered FIIs in the country stood at 1,745 and the total number of sub-accounts was at 6,398.