New Delhi, May 9 (IANS): Anxiety over the outcome of minimum alternate tax (MAT) on capital gains, poor quarterly earnings, rising oil prices and decline in rupee value led the foreign investors to ship-out cash from the Indian equities market during the week ended May 8.

The Foreign Portfolio Investors (FPIs) remained net sellers in the Indian equities market for the week ended May 8. They sold stocks worth Rs.6,553.44 crore or $1.02 billion in the equities market.

According to data with the National Securities Depository Limited (NSDL), the FPIs had pumped in only Rs.18.77 crore or $3.01 million into primary and other markets for the week under review.

For the previous week ended April 30, the FPIs had off-loaded stocks worth Rs.4,603.14 crore or $725.77 million. At that time the foreign investors had bought scrip worth only Rs.8.07 crore or $1.21 million in the primary and other markets.

The Foreign Institutional Investors (FIIs) along with sub-accounts and qualified foreign investors have been clubbed together by market regulator Securities and Exchange Board of India (SEBI) to create a new investor category called FPIs.

According to analysts foreign investors were anxious about the MAT issue on capital gains that has been sought from them.

"MAT issue coupled with poor fourth quarterly earning results season, rising oil prices and growth in the US non-farm jobs has led the foreign investors to ship-out from the Indian equities markets," Devendra Nevgi, chief executive of ZyFin Advisors told IANS.

"Though short-term investors may have exited, the key focus should be over the long term investors like pension and endowment funds which are still very much interested in India."

MAT on capital gains is expected to impact the margins of investment funds, while rising crude oil prices and falling rupee value might lead to inflation soaring and axe chances of any further rate cuts by the apex bank.

The non-farm job growth in the US is also a concern for emerging markets like India. Growth in these jobs has the ability to push the US Federal Reserve to increase interest rates there by attracting funds back into their equities markets.

Global ratings agency Fitch also said that the MAT issue could lead to further exodus of foreign funds from the Indian stock markets if the government does not resolve the matter soon.

"It may lead foreign portfolio investors to think twice in the future, although India's strong growth outlook compared to many of its peers may attract them anyway," Thomas Rookmaaker, director of sovereign ratings with the agency, said in a statement e-mailed to IANS.

"There have been some net foreign investor outflows in equities in recent weeks, but not so much in bonds," he said, adding that India's external balances were strong and could well withstand the outflow.

The foreign investors' selling spree weighed heavy on the stock markets which lost significantly in three straight days till Thursday. The losses took a key markets index to its lowest level in 28 weeks.

With a fall of 0.18 percent on Tuesday, 2.63 percent on Wednesday and 0.44 percent the day after, the 30-share sensitive index (Sensex) had closed at its lowest level since Oct 21, 2014.

However, the FPIs selling spree may finally cease as the government has given assurances to remedy its tax policy. Finance Minister Arun Jaitley had told parliament that the issue of MAT was now with a panel led by Law Commission Chairman A.P. Shah with a request for early suggestions.

Anindya Banerjee, senior manager with Kotak Securities, told IANS that leaving the MAT issue aside, international factors like Euro bond yield and US non-farm job increase will dictate the course of FPIs in India.

However, Banerjee added that the strong fundamentals of the Indian markets have the ability to withstand most of the challenges or future financial shocks.

Experts added that the FPIs will also look forward to major industrial growth and inflation indicators that will come in by next week.

The other major trigger for foreign investors will be the final days of parliament's budget session. The government is expected to aggressively push some of the key pending bills like the one on land acquisition, goods and services tax (GST) and black money stashed away abroad.