Is it actually possible to make profitable trades by taking advantage of seasonal patterns in individual stocks?

The answer is YESNO, May be

While this may be one of the more amusing research works we have done in a while, the results do tell a story.

DISCLAIMER: I do not buy, nor encourage buying stocks based on seasonal patterns.

Seasonal stock investing is about understanding recurring patterns in stock prices to assess when to buy / sell a particular stock. Seasonality is based on the concept that “History repeats itself; investing based on this principle could possibly (but not always) give you repetitive results.

Seasonality is not only about natural seasons like summer, winter, spring and rains. Stock prices also get affected by certain non-natural seasons for example corporate earnings, holiday season, election, budget etc.

Season Stocks
Summers Voltas, Hitachi, Whirlpool, Vadilal, Bluestar
Rainy Chambal, Deepak, RCF, Tata Chemicals
Winter Tata Tea, Tata Coffee, Mcloed Russel
Budget Railways, Education, Agro Based Stocks


Seasonal Stocks – Where product sales are impacted by seasonality.

Summer Stocks – As the temperature begins to rise, investors buy stocks of companies associated with air conditioners, cooling systems, consumer durables and tours & travel that normally see an uptrend between March and June. Look at the price change below (this is despite a relatively weak performance of stocks in the overall market during the same period).

Stocks CMP Dec 2016 May 2017 Change % (in 5 months)
Blue Star 684 439 680.15 55%
CG Power and Industrial Solutions 78.25 55.60 77.50 39%
Havells 478 313 473.50 51%
Hitachi Air 1801 1360.35 1793.25 32%
Manpasand Beverage 704 542 711 31%
Vadilal 905.50 480 909 89%
Voltas 415.20 300.40 414.85 38%
Whirlpool India 1228 854 1222.60 43%

Shows that Seasonal Patterns in Individual Stocks are not Random Phenomena

Vadilal Industries: Jan to March price change
  Jan May Change %
2013 171.23 221.35 29%
2014 127.45 169.76 33%
2015 250 482.56 93%
2016 487.19 704.97 45%
2017 490.40 903.35 84%

 Winter Stocks – During winters, demand for tea and coffee increases.

Company Name Last Price May 2016 Oct 2016 Change % (in 5 months)
Tata Global Bev 156.80 115.90 154 33%
Bombay Burmah 932.55 399 673.40 69%
CCL Products 342.10 193 252 31%
Tata Coffee 127.00 85.40 150.05 76%
Mcleod 190.30 179.50 188.80 5%

Rain Stocks – Good monsoon prediction by the MET department tends to increase interest in FMCG goods, two-wheelers and tractors, agrochemicals, fertilizers, seeds company and hydro-power generators.

Stocks CMP 1 Year Return
Kaveri Seed 565.80 44%
Dhanuka Agritech 916.50 53%
UPL 805.05 57%
Chambal Fertilizers 100.80 67%
Escorts 564.65 234%
M&M 1340.95 0%
Swaraj Engines 1838.15 70%
Shakti Pumps 249.10 48%

 Festival Season

Last five months of the year, consumption-driven companies gain investors interest. Festive season is one of the pick periods for automobile, jewelry and consumer durable goods sale.

Company CMP Aug-16 Nov-16 Aug – Nov 2016
Hero MotoCorp 3365 3176 3600 13%
Maruti Suzuki 6663.05 4880 5972 22%
Nestle India 6714.4 6747 7061 5%
PC Jewellers 426.2 421 520 24%
United Spirits 1947 2375 2598 9%
Voltas 415.1 350 387.75 11%

 Railway Stocks Around Budget

Railway stocks are generally in limelight only around the Railway Budget and post that nobody talks about them for a year.

In the past many years, it is noticed that these railway stocks start gaining investor’s interest six to eight weeks ahead of the budget. But soon after the budget, they tend to start slipping, most often, shedding all the gains made in the rally.

STOCKS Price on Dec 2016 Price on  Jan 2017 Change % (pre- budget) Price on Feb 2017 Change % (post- budget)
Titagarh Wagons 108.00 130.85 21% 106.00 -19%
Texmaco Rail 102.70 117.20 14% 90.10 -23%
Stone India 70.05 84.10 20% 60.55 -28%