Indian stock markets rise strongly in May

Mumbai

Indian stock markets performed better than many global markets in May, helped by a strong economy and widespread buying across different sectors. A new report by PL Asset Management highlights that India’s mid- and small-cap stocks saw the biggest gains due to improving investor confidence and strong economic fundamentals.

Siddharth Vora, Head of Quant Investment Strategies at PL, said that India’s stable economy and better global mood are creating a good environment for investing.

In May, the Nifty index increased by 1.7%, finishing near the 24,800 mark. However, mid- and small-cap indices did even better. The Nifty Midcap 150 rose by 6.5%, and the Smallcap 250 went up by a strong 9.5%. Sectors like defence, metals, and public banks led the way. Retail investors also showed more interest.

India’s overall economy looked healthy. The country saw steady tax income, lower inflation, good factory activity (PMI), and growing foreign exchange reserves. These positive signs helped increase investor trust.

The Nifty 500 index rose 3.5%, while the Equal Weight version of the same index jumped 8.5%, showing that gains were not just limited to a few big companies.

Valuations have increased. The Nifty’s price-to-earnings (PE) ratio hit 22.3, and its price-to-book (PB) ratio stood at 3.6. Mid- and small-cap stock valuations were above their five-year averages but still within normal one-year ranges.

Among investment styles, quality, momentum, and high-beta stocks performed best. All showed strong gains in May, reflecting investor confidence and smart sector shifts.