Despite facing one of the most challenging external environments in recent years, India’s equity markets demonstrated remarkable resilience during May 2026, supported by strong domestic investor participation, broad-based earnings growth and robust macroeconomic fundamentals, a report said
The data compiled by PL Asset Management noted that May was characterised by two sharply contrasting global narratives. While investors across developed markets poured capital into artificial intelligence and semiconductor-driven stocks in the United States, South Korea and Taiwan, India confronted multiple external pressures, including a surge in crude oil prices, currency weakness and elevated wholesale inflation.
Despite these challenges, Indian equities displayed notable resilience. The Nifty Midcap 150 gained 2.60 per cent and the Nifty Smallcap 250 advanced 1.56 per cent during the month, even as the benchmark Nifty 50 declined 1.87 per cent.
Foreign institutional investors remained net sellers for the eleventh consecutive month, withdrawing approximately Rs 55,963 crore from Indian markets during May. Domestic institutional investors, however, invested Rs 82,668 crore, fully offsetting foreign outflows. Cumulative domestic institutional purchases during calendar year 2026 crossed Rs 4.16 lakh crore.
The report described this trend as a structural transformation in Indian markets, with domestic investors increasingly emerging as a reliable stabilising force during periods of global uncertainty. Domestic ownership in Indian equities has risen to a record 18.9 per cent, while foreign institutional ownership has declined to 14.7 per cent, its lowest level since June 2012.
Corporate earnings also remained supportive.
The Reserve Bank of India maintained the repo rate at 5.25 per cent in its June policy meeting, marking the third consecutive pause following cumulative rate cuts of 125 basis points since February 2025. The report noted that benchmark Nifty valuations have corrected to nearly 11 per cent below their five-year average, creating what it described as one of the most attractive entry points in recent years.
Commenting on the outlook, Siddharth Vora, Fund Manager and Head of Asset Management at PL Capital, said global market leadership has become increasingly concentrated in artificial intelligence and semiconductor-related stocks, particularly in South Korea, Taiwan and the United States.
