However, future FII flows might be driven by global funds not as heavily positioned in India,” said the report, authored by research analysts Jyotivardhan Jaipuria and Anand Kumar. 

According to Credit Suisse Securities’ India Market Strategy report, India’s premium to other EMs was near a five-year high and suggested more upside was likely.

“We find the comparison with other EMs as a basket inappropriate." A more appropriate comparison in our view is India's premium versus MSCI World: it is up a mere 13 per cent from the bottom, and far below the peak of 46 per cent in July '10,” said the report, authored by research analysts Neelkanth Mishra and Ravi Shankar. 

Foreign Private Investors own 23 percent of the 50 Nifty companies, as per the Kotak report which is equal to nearly half of the publicly available shares.

 The report also added that the number of shares to be owned by the foreign investors have certain limits now.

There are many individual sectors, where the foreign ownership is inching closer to their ceilings.

Foreign investors have been net buyers by 71,109 crore so far in 2014, even as the benchmark indices are up around 22 percent.

They have increased their shareholding in 172 of the 350 mid-cap and small-cap companies which have declared their shareholding pattern so far, cutting stake in 114. They have raised their holdings in 33 of the 50 stocks that make up the National Stock Exchange’s Nifty index. 

Additional to Rikesh Parikh, Vice-President, Motilal Oswal Securities said capital raising by companies could provide some room for further investments. “The Initial Public Offer and Qualified Institutional Placement pipeline, coupled with the government divestment programme, could help absorb additional foreign inflows,” he added.

Statistics from Prime Database shows that the government has a disinvestment pipeline of about 60,000 crore for this financial year and qualified institutional placements raised 16,293 crore in the June quarter.