Despite facing a tough external environment, India’s equity markets exhibited resilience in May 2026. Supported by strong domestic investor participation, earnings growth, and solid macroeconomic fundamentals, Indian equities stood strong. The Nifty Midcap 150 rose by 2.60%, the Nifty Smallcap 250 by 1.56%, while the Nifty 50 fell by 1.87%.
Foreign institutional investors continued to sell for the eleventh consecutive month, withdrawing around Rs 55,963 crore. However, domestic institutional investors countered this by investing Rs 82,668 crore, surpassing foreign outflows. The trend signifies a shift in Indian markets, with domestic investors playing a stabilizing role during global uncertainties.
Indian corporate earnings remained supportive, and the Reserve Bank of India maintained the repo rate at 5.25% in its June meeting. This marked the third consecutive pause after a total rate cut of 125 basis points since February 2025. Benchmark Nifty valuations corrected to nearly 11% below their five-year average, presenting an attractive entry point.
