Prior to this, FPIs had net withdrawn a record Rs 1.1 trillion in March and Rs 15,403 crore in April.
Noting that the quantum of outflow in May was lower than the previous months, Himanshu Srivastava, senior analyst manager research, Morningstar India, said "a net inflow of $2.3 billion was pumped into the Indian equity markets by FPIs on one single day, May 8th which changed the scenario for the month."
This could be attributed to the attractive valuation of the Indian equities after the sharp correction this year and significant depreciation of Indian rupee against dollar, which provided FPIs a rather good entry point, he added.
However, he said that "since the Covid-19 pandemic has spread across various countries and regions, foreign investors have turned risk averse and have rebalanced their portfolios away from emerging markets."
Consequently, they have shifted their focus towards safer investment options or safe havens such as gold or US dollar, as against investing in fixed income securities of emerging markets like India, given the higher risk levels, he added.
"In the short term, we will have to wait at least till second quarter and third quarter to see steady inflows," said Harsh Jain, co-founder and COO at Groww.
Giving a global overview, Jain added that rising tensions between the US and China regarding the autonomy of Hong Kong and the national security law passed by Beijing could keep global investors cautious.