FIIs, on an aggregate basis, reduced their holding to 28.6 per cent during the period under review from 29.2 per cent in the January-March quarter, as per a report by ICICI Securities.
A slew of global and domestic factors including concerns about slow revival in corporate earnings, taxation issues, uncertainty over Greece's debt crisis and better returns from Asian peers have prompted FIIs to reduce their holdings, market experts noted.
The slowdown in inflow is also coincided with the initial scare of Fed tapering and its impact on US interest rates.
However, the report said that FII inflow is expected to improve, but at a tepid pace, in the second quarter of the current fiscal (2015-16).
According to the report,"key factors that can stimulate FII flows in the second quarter are : receding fears of a global financial shock due to a mismanaged Grexit and a sharp US interest rate lift-off and relative attractiveness of India vis-a-vis emerging markets.
"However, the bearish outlook for emerging markets due to a crash in Chinese markets, gradual US rate hike and domestic concerns - weak first quarter earnings, prospects of below average monsoon, slowing reform agenda (due to disruptions in Parliament) - may cap the resurgence in FII flows," it added.
"They have trimmed their holdings in 41 Nifty stocks and reduced their holdings quite significantly (over 2 per cent ) in five stocks -- Hindalco, Bank of Baroda, TTMT, Hero Motocorp and Zee Entertainment," the report noted.
During the first quarter, top FII 'buys' were Sun Pharma, Eicher Motors, Bharti Airtel, Lupin and Reliance Industries, while top 'sell' list are Infosys, Axis Bank, HDFC, Nestle India and Hero Motocorp.
Interestingly, 30 per cent of FIIs holding are concentrated in only five stocks -- HDFC, Infosys, HDFC Bank, TCS and Reliance Industries.