Street signs: Sell in May and go away, expiry of pre-IPO lock-ins & more

The jury is still out on whether the Wall Street adage of ‘sell in May and go away’ will be applicable this month. With the National Stock Exchange Nifty nearing its resistance zone of 18,100, following a strong upmove in April, some believe it is prudent to take some money off the table. However, there is a section which believes investors should look to buy the dip as the market will remain trending upward, with some hiccups along the way. “May has been a turbulent month 50 per cent of the time over the past two decades. However, investing in May has produced an average double-digit return by the end of the calendar year 83 per cent of the time. Therefore, investors should use any volatility in May to their advantage to build a quality portfolio,” reads a note by ICICIdirect, which expects the Nifty to gradually head towards 18,300-18,500 levels.

Brokers on a sticky wicket on margin shortfall penalty

The broking community is on the edge as the new penalty structure on intraday margin shortfall comes into effect on May 2. Under this, clearing corporations have been asked to capture segment-wise intraday snapshots and penalise brokers if there is a shortfall in the minimum margin collection from their clients. This rule has been in place since last year, but no penalties were being levied until now. Industry players say the decision to levy penalty on intraday shortfall will impact them “immensely” as real-time margin collection remains a challenge, particularly for small brokerages. The penalty was to take effect in February; however, it was deferred, following representations by brokers. The Securities and Exchange Board of India has also provided relief to brokers to not include the previous day’s spillover while considering margin allocation.

Save the date for expiryof pre-IPO lock-ins

The one-year lock-in on the shares of Hariom Pipe Industries — one of the best-performing initial public offerings (IPOs) of 2022 — is set to end on Tuesday (May 2). Nearly half of its equity will be freely available for trading, which could put downward pressure on its stock price, observe analysts. Shares of the company have risen over 3.5x its IPO price. In the recent past, stocks have felt the squeeze after the expiry of the lock-in period meant for anchor investors or pre-IPO shareholders such as promoters. The lock-in period on a few other companies such as Venus Pipes and Tubes, Rainbow Children’s Medicare, Prudent Corporate Advisory Services, and LatentView Analytics also ends later this month.