- Wealth PMS (50L+)
It was was rather flat week except for Silver which fell ~4%. Crude has cooled off nicely since its spike from Russia-Ukraine war and the impact is also showing on easing inflation numbers in India. S&P 500 and Nifty 50 too gained a little over the week.
It was a good week for Auto stocks as the index gained 4.2%. Private banks did well while PSU banks struggled.
“Sell in May and go away,” an adage as old as time. Just as a fun exercise, we analyzed this strategy’s effectiveness in the Indian market. We’re letting charts tell most of story.
Interestingly, “sell in may” outperformed in 10 out of 23 calendar years!
But, point to point returns can be deceptive. So we look at rolling returns.
On a three-year rolling basis, the Sell-in-May plan would’ve felt better nearly 37% of the time. Shaded sections show when it would’ve been ahead of Buy-and-Hold. Considerable periods between 2004-2010 and less often after.
Cumulatively, the Sell-in-May portfolio would’ve trailed the Nifty by 0.5% CAGR over two decades. Unsurprisingly, picking an arbitrary month to sit out of a market that trends up ~70% of the time is a bad idea.