What does the history suggest about equity returns in November?
5paisa Research Team
2nd November 2021 - 05:33 pm
In this article, we will try to find how stock market participants have behaved in the month of November.
Human beings are a creature of habit and repetition. Many things that happen in our lives follow a cyclical basis. And these cycles can greatly affect the way a person thinks or feels. Even within nature, there exists a cycle, where the sun unfailingly rises in the east and then sets in the west. The moon revolves around the earth. The earth revolves around the sun.
Most of us recognize and accept the notion that our thoughts, attitudes, and emotions can change with the seasons. There is an important connection between our behaviour and the stock market as it is the ultimate arbiter of human emotion as it relates to all things financial.
Stock markets too experiences seasons or cycles. At the very least, one can make the case that there are bull seasons when the stock market advances, and bear seasons, when the stock market declines. In addition, one could argue that there are at least two or three other seasons in the stock market such as an extended trendless period.
In this article, we will try to find how stock market participants have behaved in the month of November. For this, we have taken the Sensex data since 1979 and took monthly returns every month. Out of 42 years of study, we found that 22 times in the month of November, Sensex has generated negative returns while 20 times it has generated positive returns. The average November month return for Sensex has been negative 0.54%. The average return when the Sensex gave a negative return has been negative 5.14%, whereas in the case of a positive return it has been 4.53%.
The table below shows the key stats of the last 42 years November month returns.
|
Stats |
Returns |
|
Average |
-0.5% |
|
Max |
14.7% |
|
Min |
-23.9% |
|
No. of Months (-ve return) |
22 |
|
No. of Months (+ve return) |
20 |
From the above table and analysis, we can conclude that November will be a bad month for the equity market returns, as the odds are in favour of giving negative returns in November.
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Tanushree Jaiswal
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