May was a difficult month globally. The US-Iran conflict, which had briefly settled, flared up again and this time it hit closer to home for Indian investors.

Crude oil prices stayed above $100 per barrel for most of May, reviving fears around imported inflation, pressure on India’s current account deficit, and rising fuel costs. India imports about 85% of its oil, so when global oil gets expensive, we feel it at the pump, in our grocery bills, and in company profits.

India’s wholesale inflation surged to a 42-month high of 8.3% in April, raising fears of persistent inflationary pressures and a potentially delayed rate-cut cycle by the RBI. The government responded by hiking petrol and diesel prices adding to the pressure on household budgets.

The mood in May, both globally and domestically, was cautious.

May gave back some of the gains from the previous strong run.

In plain terms, if you had ₹1 lakh invested in a Nifty index fund at the start of May, it was worth roughly ₹98,100 by month end. Not a crash, but a dip.

The rupee remained under pressure throughout the month, weakening amid concerns over higher US Treasury yields and a stronger dollar both of which made India less attractive to foreign investors.

Pharma, Healthcare, and Metals were the better-performing sectors. IT was the weakest.

• Oil stayed expensive.Rising oil prices spooked investors throughout the month, leading to more foreign investor exits, which had a cascading impact on the rupee. A weaker rupee makes imports costlier, squeezes company margins, and reduces investor confidence.
• Foreign investors kept selling. FIIs sold Indian stocks worth ₹55,963 crore in May as rising US Treasury yields made dollar assets more attractive.When global investors find better returns elsewhere, they pull money out of India.
• Rate cut hopes faded. With inflation running high, the RBI was not in a position to cut interest rates as markets had hoped.Domestic bond yields rose to six-week highs, suggesting the lending rate relief that markets were anticipating could be delayed further.

• Even in a tough month, the picture here was more reassuring than the headlines suggest.
• Equity mutual fund inflows came in at ₹22,907 crore, the lowest monthly figure so far in 2026. Some investors stepped back given the uncertain environment. That’s understandable.
• But step back and look at the bigger picture: May marked the 63rd consecutive month of positive equity fund inflows. Even through oil shocks, geopolitical tensions, and foreign selling, more money went into equity mutual funds than came out. Every single month for over five years.
• Industry AUM held steady at ₹81.58 lakh crore as of May 31, a marginal contraction that the AMFI CEO described as the industry holding its ground amid ongoing global uncertainties and commodity price volatility
• On debt funds, the category saw net outflows of ₹96,948 crore in May, largely concentrated in liquid funds, overnight funds, and money market funds. This sounds alarming but isn’t. It reflects large institutions (banks, corporates) withdrawing short-term cash parked in these funds, which is routine at certain points in the financial calendar. Retail investors were largely unaffected.

Gold prices in India stayed elevated in May at around ₹14,516 per gram. Demand remained strong as investors looked for safety amid West Asia tensions and market volatility.

If you hold gold as part of your portfolio, it did its job in May, holding steady while equities dipped.

• If your portfolio is down this month: A -2% month is not a crisis. Markets move in both directions. What matters is where they are five or ten years from now, not at the end of May.
• If you’re on a SIP:You actually bought units at lower prices this month than last month. When markets recover, those units will be worth more. This is not a problem, it is the SIP working exactly as designed.
• If you were thinking of pausing your SIP: Consider this; 63 months of uninterrupted positive inflows through wars, rate cycles, inflation scares, and foreign selling. The Indian investors who stayed consistent through every difficult month are the ones who have seen their wealth grow.
• What to watch in June: Crude oil prices, rupee movement, FPI flows, the RBI’s June policy commentary, monsoon progress, and rural consumption trends will be the key market drivers in the coming weeks. A good monsoon alone can shift the mood quickly, it signals healthy harvests, higher rural incomes, and stronger consumer spending across India.