As sentiments continue to turn from bad to worse, the outflow of foreign institutional investments from Indian equity has gathered momentum and has hit a near three-year high for the month of August. The net outflow for the month of August reached Rs 11,222 crore — the highest since October 2008, post the Lehman collapse when the net outflow was at Rs 15,347 crore.

The net inflow for the calendar 2011 also turned flat and on Friday the net investment stood at (-) Rs 502 crore for the calendar 2011 as against Rs 133,264 crore in the calendar 2010.

The FII participation has a strong co-relation with the Indian equity market performance. With the outflow of FII money to the tune of Rs 11,222 crore in the month of August, the Sensex at the Bombay Stock Exchange in the same period has fallen by 12.9 percent.

On Friday alone the net FII outflow stood at Rs 1,494 crore and the Sensex fell by 1.8 percent.

Experts say that there is a feeling of general risk aversion in the market and they money coming back in the short-term is unlikely.

FII's have grown even more wary of the Indian markets since the Reserve Bank of India went for an unexpected 50 basis point hike in the repo rate in July.