Benchmark sensitive index Sensex was among the top performing indices globally during May, and this momentum is expected to continue in the next two-three years, says a report. The one month return of S&P BSE Sensex stood at 3.9 per cent, while for South Korea's Kospi it stood as high as 6.1 per cent, for FTSE it was at 4.1 per cent and Hong Kong's HangSeng at 4 per cent, the research note by ICICI Prudential AMC said.

Returns of the benchmark index are absolute returns calculated between April 30 to May 31, 2017. "From a global context, India stands out for three reasons - stable macros, prudent fiscal and monetary policies, and gradual but steady pace of reforms," the report said and added that with the implementation of Goods and Services Tax (GST), there is huge expectation of the tax base increasing and a larger part of the economy coming under taxation.

In India, among the market-cap based indices, the large-cap index continued to outperform. While returns for BSE Sensex stood at 3.9 per cent, for BSE mid-cap, it was at (-) 1.1, and for BSE small-cap it was (-) 1.8 per cent.

"We recommend that investors continue to maintain over-weight exposure in equities. Reasonable growth is expected from equity markets over the next two-to-three years," the report added.

Meanwhile, the benchmark indices of China, Brazil, and Russia gave negative returns of (-) 1.1 per cent, (-) 3.9 per cent and (-) 5.2 per cent respectively. India has gained significant traction among the investing community globally as the policy environment has been improving.

"The interest of foreign investors can be gauged from the higher level of foreign direct investment. It has now again reached around 2 per cent of GDP," the report added.

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