Foreign institutional investors (FIIs) have sold stocks worth $4.73 billion during July-September so far, their biggest quarterly sell-off at least since 1999. Despite the selloff in last three months, net foreign institutional investment for the year so far is still positive at $6.54 billion.A host of factors, such as slower-than-expected demand growth in major economies, geopolitical and trade tensions and a gradual weakening of the economic growth prospects in India have contributed to the risk aversion.India Ratings believes foreign funds flow into India is expected to remain under pressure in the near to medium term despite the government rolling back tax surcharge on FPIs and benign global monetary policy stance.FPIs pulled out more than Rs 30,000 crore from Indian equities during July-August after Finance Minister Nirmala Sitharaman in her maiden Budget levied the tax surcharge on overseas investors. Ever since the surcharge was announced in July, foreign investors had been demanding rollback of the decision, and on August 23, the government finally withdrew the same.Gautam Chhaochharia, Managing Director and Head of Research at UBS Securities, said, “The FPI tax was not the single biggest driver why they were selling to begin with. They were selling because they had pumped in a lot of money pre-elections in the hope that Mr Modi with a new majority will push through policy measures to revive growth and reforms. Then the Budget turned out to be a disappointment. I do not think this necessarily was a reaction just for FPI tax, it was a reaction to the overall disappointment about growth and then the slumping growth locally and also what is happening globally.”Following the unabated selling pressure by foreign institutional investors, BSE benchmark Sensex has cracked 8 per cent since July On while BSE Midcap and Smallcap indice fell 10 per cent each.As much as 80 per cent of Sensex stocks eroded investors’ wealth during the ongoing quarter, with YES Bank falling the most at 40 per cent. Tata Steel, Tata Motors, SBI, Axis Bank, Mahindra & Mahindra, ONGC and Vedanta have cracked 15-33 per cent during July 1-September 17.Among the top gainers, Infosys and Asian Paints climbed 13 per cent each.Among FII-heavy stocks, HDFC has slipped 11 per cent in the ongoing quarter till September 17. Shriram Transport Finance, Indiabulls Housing Finance, IndusInd Bank , Just Dial and Care Ratings have fallen between 3 per cent and 44 per cent.Anshul Saigal, Head & Portfolio Manager, Kotak Mahindra AMC told ETNow that the immediate reason for the latest bout of volatility in stocks seems to be crude oil. “Markets have become nervous because of global reasons than domestic ones. Of course, there are domestic reasons as well, but the nervousness, in general, runs through emerging markets globally.“In the small and midcap space, this nervousness has continued through the year and the markets are moving in fits and spurts and in certain periods, you will see a complete trend reversal. Since these data points are adverse, markets will reverse again. For an investor to time market moves is really a loser’s proposition. This is a market where one has to take a directional call and sit on it -- be it for the long or short term -- without worrying about volatility,” he said.