The net outflow by foreign portfolio investors (FPIs) follows a withdrawal of Rs 12,770 crore from the stock market in August. Prior to that, they had pumped in over Rs 62,000 crore in the past six months.
According to the latest depository data, FPIs withdrew a net Rs 3,085 crore ($481 million) from September 1-15.
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After taking into the account the latest outflow, the total investment by FPIs in equity markets is at Rs 45,099 crore (about $6.8 billion) this year.
"Lacklustre corporate earning seasons and lack of clarity on the impact of GST on the medium term can be attributed to outflow by FPIs. Besides, valuations of Indian equities were already expensive coming into the second quarter of the fiscal," Bajaj Capital Senior V-P and Head Investment Analytics Alok Agarwala said.
Also, investors were worried about fast-changing developments involving North Korea. The Korean peninsula took limelight after North Korea fired another missile over Japan that landed in the Pacific Ocean, further ratcheting up geopolitical tensions.
However, the debt markets retained its allure among FPIs as strengthening the currency, political stability and high yields in the corporate bond markets added to the attraction.