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 per cent drop in May 2012. In 2010 and 2011, Sensex fell around 2.5 per cent 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 $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 ($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 per cent to 7.25 per cent. Inflation fell to over three year low of 4.89 per cent 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.
‘Rs unlikely to depreciate further this week’ After touching an 11-month low of 56.50 per dollar, rupee is unlikely to weaken further and may trade in 56-level this week, experts said.
“last week, the depreciation of rupee had come in the wake up strengthening of dollar against all major currencies. Also, domestic factors like high current account deficit (CAD), GDP numbers and demand for dollars for defence buying and oil importers contributed to this.
“However, as some of these negatives are likely to be absent going ahead, rupee is likely to claw back to 56 level,” P Paramasivam, General Manager of Corporation Bank who looks after treasury operations, told the news agency. He said perception on CAD would drive the rupee movement in the near term.
Taking cues from the massive fall in equities, rupee declined by 12 paise to end at 11-month low of 56.50 against the US dollar on Friday amid worries over India’s current account deficit and GDP growth, which hit a decade low of 5 per cent in FY13.
last month, the Indian unit witnessed its worst decline (4.8 per cent) in the last 12 months. “Further depreciation of rupee from 56.50 level seems to be little remote next week. However, the situation is little dicey to predict future movement,” Chief Currency Strategist of Geojit Comtrade, Hemal Doshi, said.
He, however, added if rupee breaches 56.40 level next week, then it is likely to appreciate in the near term. Doshi said if global market remained stable, rupee would get some support as most of the negative news concerning domestic economy had been factored last week. PTI