So far in August, FPIs have been net sellers for nine out of 10 trading sessions, indicating "extreme negative sentiment", Himanshu Srivastava, senior analyst manager research at Morningstar said.
In July, FPIs had withdrawn a net sum of Rs 2,985.88 crore from the Indian capital markets (both equity and debt).
"Prevailing uncertainty over the higher tax on FPI has negatively impacted foreign investors. They have been exiting Indian equities ever since the higher surcharge, or super rich', tax was introduced in the budget announced on July 5th," Srivastava added.
Besides, a mix of unconducive domestic and global factors have also contributed towards this exodus of foreign funds from the Indian equity markets in July as well as in August. While there has been a marked slowdown in India's economic activity, a sub-par monsoon and weak earning season have made matters worse.
Experts opined that the ongoing tension between the US and Iran and the continued trade war between the US and China have also impacted the investor sentiment.