The year 2023 proved beneficial for investors with good returns. However, the beginning of 2024 hasn’t shown significant progress due to various global events, causing concerns among analysts and investors about the possibility of 2024 turning out to be another impactful leap year.
It cannot be asserted with certainty that 2024 will witness a market crash similar to previous leap years. Let’s delve into the factors behind the leap-year market crash.
What’s Happening?
The start of 2024 saw a slight decline in market indices like Nifty and Sensex, leading some to attribute it to the leap-year effect. Several leap years have witnessed substantial market downturns globally.
The uniqueness of a leap year lies in having an additional day, making it 366 days in the year instead of the usual 365. While this extra day may seem insignificant, its impact has been observed on our financial markets. Instances like the chaos in 1992, the dot-com bubble in 2000, the financial crisis in 2008, and the COVID-19 pandemic crash in 2020 have shown how a leap year can affect markets. However, it cannot be predicted if the same will happen this time.
Leap Year: Events
1992 Leap Year: Sensex experienced a 43% decline shortly after the disclosure of the Harshad Mehta scam, although it ended the calendar year with a 42% positive.
2000 Leap Year: Known for the dot-com bubble originating in the USA, it led to a 21% decline in Indian markets.
2008 Leap Year: Recognised as the financial crisis, it impacted businesses, economies, and stock markets globally. On January 21, 2008, Sensex dropped by nearly 1,408 points, causing substantial losses for investors.
2016 Leap Year: Marked by events like demonetisation, surgical strikes, and the U.S. elections, resulting in significant market volatility.
2020 Leap Year: The recent COVID-19 crash, due to the pandemic and subsequent lockdowns, led to a major market crash globally and in Indian markets.
What Does It Mean for Investors?
As mentioned earlier, this is just a hypothesis. Investors should closely monitor global and domestic events, political changes, economic indicators, etc., to make informed investment decisions.
What’s Next?
It’s challenging to predict how 2024 will unfold for investors. With the upcoming Lok Sabha elections in the coming months, considered one of the most crucial events, experts believe that the election results will play a significant role in guiding the market’s direction.
Kotak Institutional Equities anticipates a modest 1% increase in Nifty by the end of the year, while some brokerage firms suggest Nifty could reach 23,000 by the end of 2024.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The article is for information purposes only. This is not an investment advice.
*Disclaimer: Teji Mandi Disclaimer
