Foreign portfolio investors have dumped shares worth Rs 1,400 crore in first two days of 2019, resulting in stock market starting New Year on a sombre note.
The Sensex and Nifty have declined 2 per cent in last two days.
The speculation is that foreign fund outflows have been driven by selling from some global exchange traded funds (ETFs) to trim their overweight on India.
The Indian equity market was second best-performing among emerging economies for 2018 after Brazil.
Most of ETFs track benchmarks likes MSCI or SP indices.
If one country outperforms and ETFs weight goes above country-specific weights of MSCI or SP, ETFs are forced to sell stocks proportionately, said market participants.