After logging one of the best monthly rallies in April, Indian equities enter May at an interesting crossroads. With crude oil prices elevated and the US-Iran conflict still far from over, talks around the old and famous Wall Street adage "Sell in May and go away" have resurfaced. The question now is whether this seasonal strategy still holds relevance in the current scenario.
To answer that, let's first understand the thinking behind this adage. During the May-October period, trading activity tends to slow, particularly in developed markets due to summer holidays, leading to lower participation from institutional investors. This period also doesn’t offer many strong domestic triggers to keep momentum going. On the other hand, the November–April period sees stronger tailwinds from festive demand, robust earnings, Budget-related developments and fresh portfolio allocations by global funds.
Historical data cited by Reuters in one of its reports show that equities have generally delivered weaker returns during the May–October phase, averaging around 2 per cent since 1945, compared to nearly 7 per cent gains during the November-April period. However, more recent trends suggest the pattern may be losing relevance.
In the last ten years, returns during this so-called weak phase have improved significantly, averaging around 7 per cent, including a sharp 22 per cent rally last year, indicating that timing the market based on seasonality may not be as effective anymore.
The May Heatmap: A 30-Year Reality Check
To see if this trend holds true in India, we looked at market data from 1996 to 2025. The data shows that while May used to be a more volatile and cautious month earlier, its performance has become more stable over time, with returns turning slightly positive in recent years.
Has Volatility Reduced?
A closer look at the data shows a clear shift over time. Between 1996 and 2005, May was a difficult month for markets, with an average return of around -0.36 per cent. This period also saw sharp and unpredictable moves, including a steep fall of over 17 per cent in May 2004.
However, things have changed in the last decade (2016–2025). The average return in May has improved to about +1.34 per cent. More importantly, the swings have become much smaller. Earlier, returns could vary widely, from a fall of 17 per cent to a jump of 28 per cent, but in recent years, performance in May has been more stable and predictable.
50-50 Hit Rate
Over the past 30 years, it has delivered gains in 15 years and losses in 15 years. In years when May ended in the green, the average gain was around 6.80 per cent, whereas losing years saw an average fall of about 5.20 per cent.
An even 50 per cent hit rate means May does not favour either bulls or bears.
Outliers and Regime Shifts
The "Sell in May" strategy often ignores the impact of massive recovery rallies. The most significant outlier in our data occurred in May 2009, when markets surged by 28.0 per cent in a single month, the best performance in the 30-year history. Investors who "went away" that year missed a generational wealth-building opportunity.
| Era | Avg. May Return | Max Upside | Max Downside |
| The Volatile Era (1996-2015) | +0.51% | +28.07% | -17.40% |
| The Modern Era (2016-2025) | +1.34% | +6.50% | -3.03% |
