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In the cash market, FPIs were sellers after three months of sustained buying. In August, FPIs sold stocks for Rs 20,620 crores in the cash market, says V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

FPIs invested Rs 12,262 crore in August. This figure includes bulk deals and investment through the primary market.

Rising bond yields in the US and strong dollar index are negative for capital flows. This is the primary reason why FPIs have been sellers in the cash market, he said.

FPIs have been sellers in most emerging markets in August mainly due to this double whammy of rising dollar and rising bond yields. Profit booking in financials also contributed to FPI selling, he added.

Regarding sector specific investments, FPIs have been consistently buying in capital goods. Recently, they have been buyers in health care, too. The latest jobs report from the U.S. indicates that the US economy is slowing and, therefore, the Fed might not raise rates again. This can bring down the US bond yields and the dollar index.

If this scenario unfolds, FPIs may again turn buyers in India, he added.