Slowdown in the global economy and bearish market conditions are impacting inflow of funds from foreign institutional investors even as the current account deficit during the first quarter of 2008-09 soared to $10.7 billion, says a report by the Reserve Bank of India [Get Quote].

Portfolio investment, RBI said in its report on Balance of Payments, witnessed large net outflows ($4.2 billion) in Q1 of 2008-09 due to large sales of equities by FIIs in the Indian stock market reflecting bearish condition in stock market and slowdown in global economy.

There was a net inflow of portfolio investment of $7.5 billion in the first quarter of 2007-08.

The report further said current account deficit during the first quarter increased to $10.7 billion from $6.3 billion in corresponding period last year mainly on account of higher imports.

Driven by higher import bill, which increased by more than 50 per cent, the trade deficit during the first quarter rose sharply to $31.6 billion from $20.7 billion in the corresponding period a year ago.

Oil imports in the first quarter accounted for almost 35 per cent of the country's import bill.

According to the report, Indian basket of international crude (a mix of Oman, Dubai and Brent varieties) increased to $118.8 per barrel from $66.4 per barrel in the corresponding period last year.

The non-oil import, however, recorded a modest growth of 20.9 per cent, down from 45.1 per cent in Q1 of 2007-08.