* Foreign investors sell net $2.55 bln in August
* Amount highest since Oct 2008
* Analysts say foreign investors still positive on India
By Karen Rebelo
MUMBAI, Sept 1 (Reuters) - Foreign investors sold a record amount of Indian shares in August, offloading even more than in the midst of the global financial crisis, as turbulent markets in China led many funds to reduce their holdings in riskier emerging markets.
Foreign institutional investors sold a net 168.77 billion rupees ($2.55 billion) in Indian shares in August, more than the previous monthly record of 153.47 billion rupees in October 2008, according to data from National Securities Depository Limited (NSDL).
The sales helped push India's broader NSE index down 6.6 percent in August, its worst monthly performance since November 2011.
Analysts said the sales were largely a result of the overweight positions in India by foreign investors, who have been heavy buyers since 2012.
Foreign investors had been net buyers as early as July when India was seen as benefitting from outflows from China. They remain net buyers of 275.2 billion rupees this year.
"If people are selling India it doesn't necessarily mean they are negative on India. It could be the broader asset class is what they are negative on, in this case equities and emerging markets," Gautam Sinha Roy, vice president and fund manager at Motilal Oswal said.
Data on Tuesday showed India's economy grew 7 percent in the April-June quarter from a year earlier, much slower than expected, but a rate that matched expansion in China.
However, political wrangling has stalled crucial reforms, and investors are concerned that Prime Minister Narendra Modi's reform agenda will fall short.
Meanwhile, a delay in the recovery in earnings has led Macquarie, Barclays and Ambit to downgrade Indian shares over the last few days. ($1 = 66.2625 Indian rupees) (Editing by Rafael Nam and Miral Fahmy)