Analysts said that foreign investment in the equity segment across the world is drying up.

Despite the government rolling back the controversial tax surcharge on Foreign Portfolio Investors (FPIs), the markets have seen continuous selling by FPIs in four out of five stock exchange trading sessions since the announcement last month.

Analysts say that growth worries have taken center stage, and with the June quarter GDP growth rate reported at a dismal 5 per cent, the outflow trend in the domestic bourses is unlikely to reverse anytime soon.

"FPIs have historically been inclined to the banking and financial sectors, including the NBFC's, which indicates their bet on India's overall growth story. This is why we see most inflow, as well as the outflow, in the financials," Narendra Solanki, head fundamental research, Anand Rathi Shares & Stock Brokers told IANS.

Analysts also noted that foreign investment in the equity segment across the world is drying up as investors are going for safe-haven assets like gold, as against risky assets like equity in times of a global growth slowdown.

An outflow of nearly Rs 3,600 crore has been witnessed from the equity segment, in continuation of the relentless selling trend seen over July-August after Finance Minister Nirmala Sitharaman in her maiden budget levied the tax surcharge on FPIs.

"The pre-Budget position is restored. It is being done to encourage investment in the capital market," the Ms Sitharaman had said.

Some analysts said that but for the FPI tax rollback, the outflow could have been worse.

The flow of FPIs, also known as "hot money" because of their high sensitivity to the extant health of the economy, is closely interlinked with the performance of the Indian stock markets.

Following the FPI tax surcharge announcement on July 5, the Sensex and Nifty fell sharply from their respective lifetime highs owing to the sharp outflow of foreign funds.

Heavy outflow in a stiff macro-economic scenario has been witnessed earlier during the global financial crisis of 2008, while the most recent one took place in October last year.

Agreeing with Mr Solanki, Deepak Jasani of HDFC Securities said: "Even the announcement of bank consolidation will be a non-event as far as the market is concerned. These steps will take time to show affect. The growth figures will certainly take a toll on the financial markets."

Announced on Friday, the country's Gross Domestic Product (GDP) for the first quarter of the current fiscal stood at 5 per cent -- at its lowest in over six years.

"India's real GDP growth clocked an average of 7.7 per cent during 2014-18 and 8 per cent in the first quarter of 2018-19, but it began to shed momentum through the rest of 2018-19. The year 2018-19 began on a robust note, but it was to be marked by unanticipated swings and turning points that would take their toll on India's macroeconomic performance," the Reserve Bank of India said in its annual report last week.