By Sunil Subramaniam, Financial Sector Veteran & Ex-MD of Sundaram Mutual Fund, Chennai
Instead of a quiet, seasonal “Sell in May and go away” period, the market faced sharp, data-dependent swings that kept mid, small, and micro-caps moving rapidly.
As seen from the capcurve-wise performance of the indices
Nifty Microcap 250 +6.34%
Nifty Smallcap 100 +5.12%
Nifty Midcap 100 +4.70%
Nifty 50 -1.87%
The Core Market Influencers
A. Geopolitical Shadow & Crude Volatility
The single largest driver of near-term risk appetite across May was the evolving geopolitical conflict in West Asia.The Mechanism: This conflict directly triggered immense volatility in Brent Crude pricing. Given India’s structural dependence on imported energy, days with spiking oil prices instantly weighed on equity sentiment, fueling concerns over imported inflation and potential pressure on corporate operating margins. The Counter-Balance: Conversely, on days when crude prices softened, the market saw sharp, explosive relief rallies.
B. Institutional Flow Divergence
Net Flow (₹ Cr)
FII : -55,963.33
DII: +82,668.93
Major Sectoral Performances:
Nifty IT +2.10% The lone bright spot among heavyweights. While the threat overhang of AI disruption capped explosive multi-year multiples, a sharp depreciation of the Rupee boosted projected near-term export earnings. Meanwhile, parts of the tech/IT space were finding support as value-oriented, high-dividend-yielding defensive proxies against global volatility.
Nifty FMCG -0.45% Relatively flat; outperformed on a relative basis due to its classic low-beta defensive nature during a risk-off month. However, gains were capped late in the month as the IMD officially downgraded its monsoon forecast from 92% to 90% of the long-period average, sparking minor rural demand jitters.
Nifty Bank -1.12% Weighed down directly by heavy FII exits from liquid private banking giants. Additionally, margins faced pressure as the banking system navigated a higher “cost-of-funds” regime following the RBI’s prolonged pause on rate cuts.
Nifty Metal -2.02% Hit by global macro headwinds. While a mid-month U.S.-China 90-day tariff truce briefly sparked a base metals rally, persistent geopolitical tensions and macro stagnation in Europe led to aggressive profit-booking toward the final week.
Nifty Oil & Gas -2.47% The worst-performing major sector. The Refiners and fuel retailers bore the brunt of fears regarding squeezed marketing margins and unpredictable feedstock costs.
Conclusion :
The month of May was a perfect case study in macro transmission.
The large-cap indices bore the brunt of global risk-off repositioning, closing firmly in the red as global funds used large-cap liquid names as ATM cash-out points.
Conversely, the Nifty Mid, Small and Microcap indices completely decoupled demonstrating that domestic retail and HNIs heavily favored structural, non-global-facing domestic sectors.
About the author:
Sunil Subramaniam, Former Managing Director and CEO of Sundaram Mutual Fund, is among the most seasoned voices in India’s investment management industry, with a career spanning over four decades across banking, insurance, and asset management. Currently, he advises several investment firms and financial institutions on macroeconomic trends, market strategy and asset allocation among others. He also runs a YouTube channel, ‘Sense and Simplicity by Sunil’, where he breaks down complex market trends, macroeconomic developments, and investment strategies into accessible insights for retail investors.
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