Over a five-year period, India also led with 18% annualised USD returns, compared to 12% for developed markets and 4% for emerging markets.
Within Indian equities, small-cap stocks outperformed across all timeframes, delivering 21% returns over the past three months, 39% from the market bottom in March 2020, and 36% over five years. Mid-caps followed, while large-caps lagged, the fund house said.
China was the only major market to post losses in May, declining 2%, while most other markets registered gains.
Sectorally, capital goods, telecom, and industrials posted double-digit returns in May, while utilities remained flat and metals dipped slightly. FMCG, healthcare, and IT – traditionally considered defensive sectors – delivered the lowest positive returns.
India’s services PMI rose month-on-month, indicating recovery, while the manufacturing PMI declined, pointing to a sectoral slowdown. A weakening US dollar, falling domestic interest rates, and broadly in-line earnings also supported market performance, the fund noted.
“We expect continued volatility over the next few quarters due to ongoing trade negotiations. However, India appears better positioned than the global economy,” said Manish Gunwani, Head of Equities at Bandhan AMC.
India’s fiscal deficit for FY25 matched the revised estimate of 4.8% of GDP, with FY26 targeted at 4.4%. CPI food inflation posted its sixth consecutive month of decline, while core inflation edged up. The IMD forecast an above-normal southwest monsoon, supporting a favourable inflation outlook.
Bank credit rose 9.8% YoY as of May 16, while deposits increased 10%. The RBI’s recent 50 bps policy rate cut and 100 bps CRR reduction reflect a proactive monetary stance, said Suyash Choudhary, Head of Fixed Income at Bandhan AMC.
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