The Leap year curse in Stock Market
Why every leap year brings a new sense of fear into investors.
Hello Readers,
As many of you might be knowing, that Some of the worst crashes in Dalal Street history have been during leap years.
A study of market performance since 1984 shows that the average annual returns in all the 10 leap years has been less than 8%. On the other hand, the return in non-leap years has been much higher at 23%.
Source: ET Markets
Let’s get into the timeline of it:
1992
The Indian stock market crashed by over 50 percent in 1992 when the Harshad Mehta scam was exposed.
Mehta's scheme involved using fake bank receipts to obtain funds from banks, which he then used to artificially inflate stock prices, leading to a significant market crash when the scam was uncovered.
2000
The Indian stock market crashed by over 50 percent in 2000 due to the dot-com bubble burst, which had a significant impact on the global economy, including India. The dot-com bubble crash was caused by factors like excessive speculation in technology stocks, lack of government regulation and unrealistic valuations.
2008
Indian markets crashed heavily due to the Global Financial Crisis (read more about it here) which originated in the United States due to the bursting of the bubble of the housing market.
2016
The Indian stock market crashed by approximately 26 percent in 2016 over eleven months due to various factors. One significant reason was the high level of non-performing assets (NPAs) in the banking sector, which contributed to market instability.
More factors like surgical strikes by India, demonetization and US Elections added volatility to the existing market conditions.
2020
The Indian stock market crashed by more than 20 percent in 2020 due to the outbreak of the COVID-19 pandemic, which had a swift and severe impact on various industries and livelihoods. The fear of the COVID-19 outbreak created havoc all over the globe, leading to a significant decline in stock prices.Â
2024
Indian elections showing a less grand victory for the NDA Alliance caused heavy market crashes on the day of the vote counting.
Pre counting, the markets had made new high based on the exit polls results.
Thanks for your patient reading…
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