Foreign investors have pulled out close to Rs 6,500 crore from stock markets in September amid worries over a global economic slowdown, making it the second consecutive monthly outflow.
However, debt markets have seen an inflow of Rs 692 crore during the period under review.
Analysts are now optimistic about capital inflows after the Reserve Bank of India (RBI) lowered the key lending rate by 50 basis points, which they expect may provide a positive momentum to the markets.
The latest pull-out follows a record net outflow of Rs 17,428 crore from equities last month. That was the highest net outflow by foreign portfolio investors (FPIs) in a single month since 1997.
The segregated data prior to 1997 was not available.
FPIs have withdrawn a net of Rs 6,475 crore from equities in September, according to depositories data for this month.
Market experts attributed huge outflows to sustained global risk-off trend along with concerns over economic slowdown and currency devaluation in China.
Besides, liquidity problems in the gulf countries due to prolonged slump in crude prices has prompted these nations to withdrew large chunk of their sovereign wealth fund from capital markets globally.
Since the beginning of the year, FPIs have made a net investment of Rs 21,047 crore in equities and Rs 39,395 crore in debt markets.