Foreign investors have pulled out a massive $3.5 billion (nearly Rs 23,284.63 crore) from the capital market this month so far following rate hike by the US Federal Reserve.

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Most of the outflows by the Foreign Portfolio Investors (FPIs) have been witnessed in the debt markets during the period under review.

The latest FPI outflows took place following a withdrawal of over Rs 49,700 crore on net basis from the capital market (equity and debt) in last two months (October-November).

Prior to that, FPIs had poured in Rs 46,000 crore in the capital market in preceding three months (July-September).

"The US Federal Reserve's rate hike was certainly one of the reason for the outflow as the week leading to the announcement saw the maximum outflows as investors exited, expecting lower spread with a US rate hike.

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"But independent of that, it appears that the sharp rally in November in Indian gilts could have also led to profit booking by FPIs in the debt segment," Fundsindia.Com Head of Mutual Fund Research Vidya Bala said.

Net withdrawal by foreign portfolio investors (FPIs) from equities stood at Rs 3,744 crore during December 1-23, while the same from the debt market was Rs 19,027 crore, translating into a total outflow of Rs 22,771 crore ($3.35 billion), depositories' data showed.

The pullout by FPIs started in October 2016 following uncertainty over the US election results and similar trend was observed in other emerging markets.

This year, so far, FPIs have invested a net sum of Rs 24,998 crore in stocks, while they pulled out Rs 43,737 crore from the debt market, resulting in a combined net outflow of Rs 18,739 crore.

"As of December 23, equities still remain positive on inflows for the 2016 calendar. It was the debt market that was witness to massive FPI outflows in December. The net outflows in the month of November and December alone accounted for 92 per cent of the net outflows in debt market, thus far this calendar," she added.