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Sell in May and go away: Seasonality analysis shows buy & hold best-suited for these stocks in May

Karan DSIJ
/ Categories: Mindshare, Edaily, Knowledge, General
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Sell in May and go away: Seasonality analysis shows buy & hold best-suited for these stocks in May

In this fast forward world where with a single click, one can have access to a number of trading tools, each has its own proposition and value to the user. However, the availability of an abundance of trading tools can become a double-edged sword as sometimes, it leads to over-analysis. As trader loads chart with all the tools available at disposable, the fact remains that only a handful of traders manage to make profits consistently.

We all know that trading is a probability game. Every trader knows that any trade he executes may bring either profit or loss. In this article, we will talk about a very special tool that would help traders to amplify the probability of success.

Hence, that tool is seasonality. Seasonality analysis is one of the most popular methods of modern times. It can be accredited to the specific nature of the stock that shows recurrent movement in a particular period and there is also a possible chance that the security may repeat its performance, which is consistent with the previous results. Seasonality analysis helps the traders and market participants to determine how often a stock rises every month of the year. Further, why seasonality works? Financial market cycles are primarily, investor behaviour cycles. Human nature doesn’t change and causes the recurrence of past patterns. So, taking note of crowd psychology as in how they behave during a particular month or during a particular cycle would enable a trader or market enthusiastic to be well prepared beforehand. In short, the seasonality analysis is based on the popular premise that history tends to repeats itself.

As we step into the month of May, which is generally an ominous month for the stock markets, one must remember the adage, 'Sell in May and go away'. With this, we thought of sharing a list of stocks that are likely to deliver decent performance during this month.

We have selected stocks from Nifty 500 universe by taking into consideration stocks that have a positive ratio of more than 68 per cent. The positive ratio is calculated as total positive year/total year. So, if we have to calculate a positive ratio for Godrej Consumer Products, then we'll have to divide 15 by 19*100, which come to 78.95 per cent.

Stock Name Total Year Total Positive Year Positive Ratio Average Gain 
GODREJCP 19 15 78.95 10.57
JCHAC 19 14 73.68 15.54
CUB 19 14 73.68 12.02
MPHASIS 19 14 73.68 11.74
ASIANPAINT 19 14 73.68 7.44
BOSCHLTD 19 13 68.42 8.02
UPL 19 13 68.42 17.42
BERGEPAINT 19 13 68.42 10.18
EICHERMOT 19 13 68.42 15.95
BPCL 19 13 68.42 8.85
AKZOINDIA 19 13 68.42 9.33
BALMLAWRIE 19 13 68.42 20.36
CARNORUNIV 19 13 68.42 9.53
KOTAKBANK 19 13 68.42 13.05
HEROMOTOCO 19 13 68.42 8.24
BRITANNIA 19 13 68.42 8.8
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