Foreign investors pulled out more than USD 1.5 billion from the country's capital markets this month due to lacklustre quarterly earnings and concerns over a possible rate hike by the US Federal Reserve.
The sell-off came after Foreign Portfolio Investor (FPI) inflow in the capital markets (equity and debt) hit a seven-month high in October.
As per the data compiled by the depositories, net outflow in equities stood at Rs 6,616 crore in November, while it was Rs 3,207 crore from debt, translating into a total of Rs 9,823 crore (USD 1.5 billion).
One day trading session is still left for the month.
FPIs had made a net investment of Rs 22,350 crore last month, making it the highest investment by them since March, when they had poured in Rs 20,723 crore into the Indian market.
The huge inflows during October also reversed the outflows seen during the last two months.
FPIs pulled out over Rs 23,000 crore from the capital markets in the last two months (August-September) on fears of an economic slowdown in China, which triggered a global sell-off.
The minutes of the latest US Fed meeting showed that it is ready for a December lift-off, provided subsequent actions are strongly tied to consistent improvements in the economy, which prompted investors to withdraw money.
Investor mood remained fragile because of disappointing quarterly earnings by blue-chips.
"Lingering concerns over earnings and the worsening global risk environment have prompted FPIs to pull out from Indian markets," said Vijay Singhania, Founder-Director, TradeSmart Online, a leading discount brokerage firm.
Besides, macroeconomic data impacted investor sentiment.
Industrial production slackened to a four-month low of 3.6 per cent in September, while retail inflation inched up to 5 per cent in October, as per the latest data.
However, the markets may see an inflow in coming months on hopes of a GST breakthrough in Parliament.
Since the beginning of the year, overseas investors have made a net investment of Rs 21,081 crore in equities and Rs 51,889 crore in debt market.
