Defying ‘Sell In May And Go Away’, Are We?

Sell in May and go away is a common term used on Wall Street to define how traders would sell in May and stay out of the markets till Halloween to avoid market fluctuations. But what we are seeing since the beginning of May is buying, across the globe. Global markets have been at a high and there seems to be no stopping. The Dow yesterday crossed the 15000 milestone, the Nifty sustained above levels of 6000 and European stocks have climbed to 2013 record close.

The triggers for Indian markets have been diverse. A fall in commodity prices, reduction of rates by the RBI (although not as much as expected) and favourable global equity movement have all contributed to the recent upward movement we have seen. Will this continue over today as well?

In the US, the Dow closed above 15000 for the first time. The major cues for yesterday’s movement were Australia cutting its refinancing rate and satellite TV provider DirecTV and watch maker Fossil reporting improved earnings. Overall however, the markets have been supported by the central bank’s rounds of bond purchases and better than expected earnings.

Positive earnings also had European markets rising higher. HSBC and Societe Generale reported better earnings, thus pushing markets upwards. These markets have seen a positive trend lately due to a rate cut by the ECB (European Central Bank) and the comments from its President about how there is more room for easing action.

Overall, the mood seems positive. Asian markets too have started on a positive note. Apart from macroeconomic trends, corporate results have been major contributors, which is a healthy sign. On the domestic front, the mood is set right for another positive day. One can expect a positive backdrop and some movement based on corporate results. At the same time, consolidation cannot be ruled out. Range bound movement and correction are healthy for the markets during such a trend.

Among the companies to announce their Q4FY13 results are Corporation Bank, GTL,HDFC, KEC International, Lupin, Piramal Life, Ranbaxy Lab, SKS Microfinance, Sundaram Clayton and Talwalkar. Stock prices of these companies are likely to see volatility today, with the directional trend depending on the results they announce. Heavyweights like HDFC do have the potential to mould market direction today.