Foreign Institutional Investors (FIIs) pumped a net Rs 639 crore into the Indian stocks markets in April so far.
However, market experts see the probability of FII outflows over the coming days as fears of early elections; a widening current account deficit and a deepening economic slowdown dampen sentiment.
According to data from market regulator SEBI, gross equities purchased by FIIs in the period April 2-5 stood at Rs 14,378 crore while gross equities sold were Rs 13,739 crore, resulting in a net investment of Rs 639 crore.
However, the overall net FII inflow in the first week of April masks the fact that FIIs pulled out from equities in three of the last four trading sessions, raising the possibility of further sell-offs in the stock markets by overseas investors in the coming days.
Worries over political stability have escalated in recent days with talks of an early election gaining speculation.
Morover, a record high current account deficit and a slowdown in the manufacturing and services sector signals the worsening fortunes of Asia's third biggest economy, inviting caution among foreign investors.
Output of the core industries of the economy declined 2.5 per cent in February 2013 while services and manufacturing expansion slowed sharply in March 2013.