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

The answer is YES, NO, 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%

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