Not exactly "Sell in May go away" for Indian stocks this year
New Delhi: It was not exactly "Sell in May and go away" for the Indian stocks during May 2013, as there was no broad-based selling in the market, although the gains in the benchmark Sensex were restricted to just 25 points.
While macroeconomic trends and weak global cues pulled the markets down on many occasions during the month, some kind of cushion came from better corporate earnings and continuing foreign fund flows.
As a result, domestic markets this year managed to buck the trend of a downfall for three consecutive years in the month of May.
The Sensex gained 24.53 points to 19,760.30 in May 2013 compared to over 6 percent drop in May 2012. In 2010 and 2011, Sensex fell around 2.5 percent in May.
"Domestic markets saw positive trend last month owing to strong global markets. Also, foreign fund inflows supported the positive domestic market trend," said Ashika Stock Brokers, Research Head, Paras Bothra.
Overseas investors have poured in over Rs 22,000 crore (about USD 4 billion) in the Indian stock market in May 2013.
Foreign institutional investors (FIIs) were gross buyers of shares worth Rs 74,469 crore, while they sold equities amounting to Rs 52,300 crore, translating into a net inflow of Rs 22,168 crore (USD 4.04 billion) in May, as per Sebi data.
"Markets saw upmove in the month of May amid good overseas investment in Indian equities, better fourth quarter earnings, interest rate cut and deceleration in inflation," said Gajendra Nagpal, CEO, Unicon Financial Solutions.
RBI had on May 3 cut the key interest rate by 0.25 percent to 7.25 percent. Inflation fell to over three year low of 4.89 percent in April. These positive cues also helped, said experts.
In previous years, May has been mostly bad for the stock markets globally, but the Indian markets had seen mostly alternate gains and losses during May till 2009.
The "Sell in May and go away" strategy is that an investor who sells stock holdings in May and gets back into the equity market in November, avoiding the typically volatile May-October period, would be better off than an investor who stays in equities throughout the year.