An analysis of market behaviour in the past 15 years (1990-2004) shows that for 11 years, BSEs benchmark Sensex has slipped in March. More so in the past five years, including 2004, when the markets consistently yielded negative returns between 1.36 per cent to 15 per cent in March.
Seven out of the 10 times when the Sensex gave negative returns in March, the bearishness continued in April. In all of the past five years and in nine of the past 12 years, the returns were negative in the range of 1-11 per cent during April.
So, whats in store for April 2004
The consistent fall in the past three months, depleting volumes and the impending polls have made investors wary of equities. But a section of the marketmen are still optimistic thanks to the 270-point rally in the past three days.
However, its still anybodys call how the markets would pan out. Whether it would follow or defy history.
Traditionally markets fall in March due to the correction after the budget, and year-end considerations when companies are in the wrapping up mode, according to broking firm Mefcom Capital Marketss chief Vijay Mehta.
Equity analyst Dinesh Chandel of online broker Indiabulls adds, Historically, the Union budget announcement in late February has been a major event for the markets as it could make or break an industry or company. Thus it has had a huge impact on equities. Usually, the positions are built up in the run-up to the budget and March and April have been the months of correction and profit-booking. Thus the negative returns in these months.
As an exception, there have been four occasions in year 1990, 1992, 1998 and 1999 in the past 15 years when markets have given positive returns of 7-51 per cent in March.
In 1992, Sensex gave an unusual 51 per cent returns in March and the period was marked by Harshad Mehta-led stock market scam when Sensex peaked at 4467 points in April 1992. Another scam led by Ketan Parekh created yet another year of positive return (10 per cent) in March, 1999. Besides, the month of March has seen positive returns in the years 1990 and 1998.