Against the backdrop of worsening global financial market turmoil and worries over the health of Asia's third biggest economy, overseas investors are withdrawing funds from Indian stocks at a rapid rate, pushing Dalal Street into low gear.
Foreign Portfolio Investors (FPIs) emerged as net sellers of Indian equities by nearly Rs 4,000 crore in the first four trading sessions of September as tepid GDP data and a rout in financial markets across the globe soured the lure for risky assets.
After pulling out a record Rs 17,428 crore from Indian stocks in August 2015, the biggest withdrawal in any month since 1997, FPIs net sold stocks worth Rs 3,825 crore during the period September 1-4, latest depositories data showed.
Foreign investors have become risk averse as a worsening slowdown in China fueled worries over the health of the global economy even as the US Federal Reserve prepares to raise interest rates for the first time in nine years.
Meanwhile, India's growth weakened last quarter with the country's GDP expansion slowing to 7 per cent from 7.5 per cent in the January-March quarter, while India's manufacturing activity expanded at a slower pace in August with the PMI falling to 52.3 from July's six-month high of 52.7, as production and demand softened, offering further evidence of an economic slowdown.
The 30-share Sensex slumped by 4.5 per cent last week, its biggest weekly loss since November 2011, to end at 25,201.9, the lowest level in more than a year.