Overseas investors, for the second straight month, in May pulled out Rs 347-crore funds from the equity market amid concerns over domestic economic growth and depreciating rupee.

Foreign institutional investors (FIIs) made gross purchases worth Rs 42,443.30 crore and sold shares valued at Rs 42,790.70 crore, translating into a net outflow of Rs 347.40 crore, according to the data available with the market regulator SEBI.

FIIs had pulled out Rs 1,109 crore from the stock market in April amid S&P lowering India’s credit outlook to negative from stable.

Market experts attributed the outflow to a slew of reasons such as depreciating rupee, high fiscal and current account deficit as well as lack of reform momentum.

“Foreign investors are staying away from the Indian equity market, despite an attractive valuation, mainly on account of weakness in rupee, which is hovering around the 56-level against US dollar,” a broker said.

Foreign investors, however, seemed to be bullish on the debt market and as they poured in Rs 3,569 crore in bonds during May.

The BSE benchmark’s Sensex has lost 1,100 points or over six per cent to close at 16,218.53 points on the last trading session of May.

After taking the latest withdrawals into account, FIIs have made an investment of Rs 41,860 crore into the equity market so far this year and Rs 21,701 crore into the debt market during the same period.

However, in the first three months of 2012, FII had invested a record Rs 43,951 crore. Of this, Rs 10,358 crore was invested in January, Rs 25,212 crore in February and the rest Rs 8,381 crore in March.

As on June 1, the number of registered FIIs in the country stood at 1,754 and the total number of sub-accounts stood at 6,334.

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