After a washout in March because of the Iran-Israel/US war, markets regained strength in April with a ceasefire in place though negotiations remain at a stalemate.
Nifty in May
A look at Nifty’s performance in May over the past decade shows a mixed but mildly positive trend, with gains recorded in most years despite intermittent volatility. The index delivered strong returns in years like 2021 (6.5%), 2016 (3.95%), and 2017 (3.41%), while more modest gains were seen in 2019, 2023, and 2025.
However, the month has also witnessed occasional declines, notably in 2020 (-2.84%) amid pandemic-led uncertainty and in 2022 (-3.03%) during global tightening concerns. Overall, May has tended to be a relatively stable month for the market, with limited extreme swings and a slight upward bias over the long term.
FII/DII trends
FII flows in May have remained highly volatile over the past decade, swinging between sharp inflows and heavy outflows in response to global cues. Strong buying was seen in years like 2023 (Rs 43,838 crore), 2020 (Rs 14,568 crore), and 2019 (Rs 7,919 crore), while 2025 also witnessed a healthy inflow of Rs 19,860 crore.
However, this was offset by significant selling in periods of global stress, most notably in 2022 (Rs 39,993 crore outflow) and 2024 (Rs 25,586 crore outflow), along with earlier instances like 2018 and 2021. The data underscores that FII behaviour in May is largely driven by external factors such as global liquidity, interest rate cycles, and risk sentiment, leading to inconsistent participation in Indian equities.
In contrast, domestic institutional investors (DIIs) have displayed a more consistent and supportive trend in May, often acting as a counterbalance to FII volatility. DIIs recorded strong inflows in most years, with particularly robust buying in 2025 (Rs 67,642 crore), 2024 (Rs 55,920 crore), and 2022 (Rs 50,835 crore), highlighting their increasing role in stabilising markets during periods of foreign outflows. Even in years of FII selling such as 2018 and 2022, DIIs stepped in with significant purchases, cushioning the impact on the markets. Although there were occasional outflows, such as in 2023, the broader trend reflects growing domestic participation and the rising influence of local institutional capital in shaping market direction.FIIs have offloaded domestic equities worth Rs 1,89,991 crore in 2026 so far, extending their selling trends from the last year.
(Data Inputs from Ritesh Presswala)
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