The Indian equity market remained buoyant in May, driven by the positive election outcome and the clear victory of the Congress-led United Progressive Alliance government. Stocks surged as investors expected major economic reforms from the new government. The rally was also strengthend by a surge in foreign inflows, which totalled at least Rs20,000 crore in one month alone, the highest in the current calendar year. The strong rally benefited the frontline indices, which registered a 28% return during the month. Mid- and small-cap stocks outperformed their large-cap counterparts and posted returns of about 38%, as measured by the CNX Mid Cap index. Mutual fund activity remained robust during the month. Fund managers cut cash exposure in their portfolios to tap the strong stocks rally and invested around Rs2,300 crore. Investors favoured infrastructure-led stocks with expectations of strong reforms from the forthcoming budget. The realty, metals and consumer discretionary stocks posted more than 50% gains during the month, followed by banking and power stocks. Shares of consumer goods companies were the least impressive performers during the same period.
Also See The Equity Funds Ride (Graphics)
Graphics by Paras Jain / Mint