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  1. ‘Sell in May’ adage may not work this year; 5 stocks to stay invested

‘Sell in May’ adage may not work this year; 5 stocks to stay invested

'Sell in May and go away' strategy may not be true for Indian equity markets this year also if we go by markets experts perceptions.

By: | Updated: May 13, 2016 1:04 PM
Stock markets in May Data shows that the benchmark BSE Sensex in May 2010 fell by 2.53 per cent, while in 2011, the index lost 2.6 per cent and tumbled 6.26 per cent in May 2012. (Photo: Reuters)

‘Sell in May and go away’ strategy may not be true for Indian equity markets this year also if we go by markets experts perceptions. The strategy says an investor, who sells 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.

Data shows that the benchmark BSE Sensex in May 2010 fell by 2.53 per cent, while in 2011, the index lost 2.6 per cent and tumbled 6.26 per cent in May 2012. However, the index gained 1.31 per cent in May 2013. In 2014, it had gained 8 per cent, while last year it went up by 3 per cent.

“Sell in May and go away is not a good strategy in India as accepted in global market. As per the history of the last six years, the average return during May-October is positive at 7.33 per cent. Hence, this period does provide a good chance to have positive return,” said Vinod Nair, Head Of Research, Geojit BNP Paribas Financial Services Ltd.

Benchmark indices have jumped over 0.50 per cent this month so far.

ICICI Securities has Nifty target of 8,500 by year-end on expectations that earnings growth will remain in range of 17-18 per cent.

In the present scenario market experts believe that the popular adage will not be true for this year also. FinancialExpress.com collated 5 stocks with the help of market experts which can give you good returns in coming future.

Mahindra Lifespace Developers
Recommended By: Zerodha
Target Price: Rs 554
Why Buy: The company has demonstrated speedier execution and sales across projects vis-a-vis its peers. With around 7.5 million sqft of sales in the pipeline, there’s strong revenue visibility for FY2016-18E. The company would be minimally impacted by the Real Estate Bill, given its strong parentage and ethically implemented processes. The stock at 1.2x FY2017E P/BV looks attractive.

Jagran Prakashan:
Recommended By: Zerodha
Target Price: Rs 554
Why Buy: Considering Dainik Jagran’s firm presence in the rapidly growing Hindi markets, Zerodha expects the company to benefit from an eventual recovery in the Indian economy.

GHCL Ltd
Recommended By: SBICAP Securities
Target Price: Rs 163
Why Buy: GHCL Ltd, a diversified business conglomerate with presence in Soda Ash, Home Textiles and Edible Salt is India’s third largest manufacturer of Soda Ash. GHCL is attractive due to positive free cash flow business, ROE of over 26 per cent, consistent dividend paying record, debt reduction, over 22 per cent EBITDA margin, strong growth outlook and attractive valuation at 3.2x of FY18e earnings.

Apollo Tyres
Recommended By: Kotak Securities
Why Buy: Apollo is a major player in the truck tyres segment and is now venturing into 2-wheeler tyre segment as well. Weak commodity prices should protect profitability in the near to medium term. The company has healthy returns ratios. The stock is trading at 7x one year forward earnings.

Tata Power
Recommended By: Kotak Securities
Why Buy: The company is mainly into power generation, coal mining and defence equipments. Following a change in law by Indonesia, the company’s power generation operations at Mundra have been incurring losses due to under-recovery in fuel costs. However, the situation has begun to improve due to decline in international coal prices. The company has approached the regulator for compensatory tariff and if the judgement is in the company’s favour, then it could be a major positive. In addition to this, the company’s defence business is looking up and has a strong order backlog. The company is also present in the manufacturing of solar modules and solar cells. The stock is trading at 7.8x FY17 earnings.

(With agency inputs)

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