Wednesday, May 1, 2013
"SELL IN MAY AND GO AWAY" UNLIKELY THIS YEAR
The popular stock market
adage "sell in May and go away" might be proved wrong this year as a
slew of positive indicators including better January-March corporate
earnings and foreign fund flows could make investors stick to stocks,
say experts. Since last three years, markets have seen selling in the
month of May, but market analysts hope that the same may not happen this
time. "Earnings have been good so far, rate cut might be on the
expected lines on May 3 policy and FIIs are also putting in money in
Indian stocks, all these are positive indicators for the markets in near
term. Only if political issues take an ugly turn, markets might see a
correction," said Gaurang Shah, Assistant VP at Geojit BNP Paribas
Financial Services. Another analyst, Paras Bothra, Research Head at
Ashika Stock Brokers said, "Selling may not happen in May this year like
previous years as before a market tanks one needs to see a huge run-up
in the equities. Also, global markets are on a strong foothold." The
BSE benchmark Sensex had tumbled 6.26 per cent in May last year, while
in 2011, the index lost 2.6 per cent and in 2010, it fell 2.53 per cent.
The 30-share Sensex had gained 3.4 per cent last month. In the
previous years as well, 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. Markets are hopeful that Reserve Bank may cut repo
rate and Cash Reserve Ratio (CRR) by about 0.25 per cent each to spur
demand and boost industrial output. The possibility of a rate cut at
the annual credit policy to be unveiled on May 3 has gone up with
inflation falling to 5.96 per cent level, the lowest in three years.
Besides, overseas investors have poured in over USD 11 billion in 2013
so far.
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