How do you see the rally in Nifty sustaining in the month of May 2020 and do you see the rally continuing?

If you are an old player in Indian markets, you would have heard of the May effect. Normally, May happens to be a tumultuous month giving rise to the quote “Sell in May and go away”. It was in May 2004 that the Nifty touched lower circuit for the first time and it repeated this lower circuit in May 2006. Barring odd years like 2009, May has been a tepid month for the indices. That is because May is when the monsoon uncertainty is at its peak and markets tend to be cautious. The euphoria of the budget and the new fiscal is also done by then. Above all, the real COVID-19 pain is far from over. The Indian economy is still unclear how and when the economy will start functioning in normal gear. Most rating agencies have pegged GDP growth for FY20 and FY21 at below 1%. That means; you can forget about any decent growth in revenues and profits. Banks could see NPAs spiking again, consumption could take hit and valuations are likely to temper from higher levels. Clearly, it is time for you to press the caution button!