Nifty Monthly Returns

The Nifty moved 1.4% up in April, which took teh annual return to just about flat (the index is down about 1.2% in 2016). We’ve now had two lousy months (Jan and Feb) and two good months (March and April) – with May already showing signs of recalcitrance.

Nifty Monthly Returns

The Sensex we have a longer history for:

Sensex Monthly Returns

What you might notice is:

  • May is a positive month on average. But May has big results too and the index tends to move a lot, looking at the high standard deviation.
  • Don’t really sell in May and Go Away. This may work for the US but data shows it’s a terrible thing to do for India. The average return for May to Aug is very positive in India => Holding stocks May to August has an average return of +4%!
  • You should really never bother investing in October. That’s been a lousy month and we can’t even blame politicians.
  • Otherwise this data only looks good and has very little real trading or investing value. What point does it make to invest based on which month it is? (However, given the success of Linda Goodman, this monthly concept makes for great snake oil to sell)

There are of course some months with reasons. March, because it tends to be the financial year end, has implications on profit booking etc. 

January, April, July and October tend to see volatility due to result announcements that happen in the first month after the quarter closes.

May is mostly an election month so there’s always a big move every five years or so. Feb is a budget month, and December is when FIIs close their books etc.

But it’s dangerous to work through a strategy that purely depends on month alone as a differentiating criterion. Just saying, even though I love the visual feel of the charts above. 

Now, tell them about it: