Fears of a slowdown in the global economy are weighing heavy on foreign investment sentiments of Indian companies in the current financial year.

Direct overseas investment by Indian companies stood at $10.5 billion in the quarter ended June, lower by 42 per cent compared to the year-ago period, according to data released by the Reserve Bank of India.

"Overseas opportunities are not attractive at the moment. In the past three-six months, people were looking for a positive turnover in the global economy. But the euro zone has gone from bad to worse and the US economy would take longer to revive," said Moses Hardings, head (global markets group), IndusInd Bank.

A

slowdown in the domestic economy has also reduced investment appetite, he added.

"Given the volatility in international markets, companies prefer to be cautious and are waiting for the appropriate time to invest," said Manmohan Singh, managing director, head (debt capital markets), Royal Bank of Scotland.

In the quarter ended June, Indian firms issued financial guarantees worth $5 billion, loans worth $4.1 billion and invested $1.4 billion in equities.

Overseas investments dropped by 55 per cent to $ 5.4 billion in June, compared to the same period last year.

The guarantees issued stood at $1.1 billion, the loans were worth $3.1 billion and investment in equities stood at $731 million in June. Mundra Port and Bharti Airtel were the major investors abroad.