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The Indian stock market, as represented by the Sensex and Nifty 50 indices, has displayed a fascinating trend over the years. A detailed analysis of Sensex performance from 1979 to 2024 reveals a consistent outperformance in odd-numbered years compared to even-numbered years. This intriguing pattern suggests a potential anomaly worthy of deeper investigation. The average gains in odd years stand at a remarkable 26.56%, significantly exceeding the 11.20% average return in even years. This disparity is further emphasized by the median returns: 18.74% for odd years versus 8.17% for even years. This historical data, while not definitively predictive, presents a compelling case for considering the year's numerical value as a potential factor when evaluating market trends, albeit a rather unconventional one. The sheer magnitude of the difference in returns warrants further exploration into any potential underlying economic or psychological reasons for this phenomenon.
Raj Gaikar, a Research Analyst at SAMCO Securities, highlights the significance of this odd-year outperformance, especially considering the current nine-year winning streak of positive annual returns for the Sensex, starting from 2016. The question now is: Will 2025 continue this trend, marking a record-breaking tenth consecutive year of positive returns? This question is crucial for investors seeking to capitalize on market trends and make informed decisions about their portfolios. While past performance is not necessarily indicative of future results, the consistent historical disparity in returns between odd and even years cannot be simply dismissed. It prompts further analysis into potential macroeconomic factors, investor sentiment, or even cyclical patterns that might explain this peculiar trend. While numerology itself is not a sound basis for investment strategies, the observed pattern necessitates a deeper investigation into its potential correlation with economic indicators and market behavior.
The maximum return in odd years reached an impressive 93.98%, considerably higher than the 50.68% maximum return in even years. Conversely, the maximum fall in odd years was 24.64%, significantly lower than the 52.45% maximum fall observed in even years. This suggests that while odd years have historically yielded higher returns, they have also exhibited less volatility compared to even years. The winning ratio further reinforces this trend: Positive returns were recorded in 17 out of 23 odd years (73.91%), compared to 18 out of 23 even years (78.26%). Although the winning ratio is slightly higher in even years, the significantly higher average returns in odd years remain a striking feature. This data suggests a nuanced relationship between the year's numerical parity and market performance, a relationship that warrants further research to identify its root causes. A complete understanding of this phenomenon could offer valuable insights for developing robust investment strategies.
Looking ahead to 2025, analysts anticipate continued long-term growth for the Indian equity market. However, current valuations are considered relatively high, suggesting limited scope for further expansion solely based on valuation multiples. Consequently, the primary driver of future market returns is expected to be increased corporate earnings. This emphasizes the importance of a bottom-up stock picking strategy, focusing on companies exhibiting ‘Growth at a Reasonable Price’ and demonstrating strong ‘Quality’. This approach shifts the focus from broad market indices to the individual performance of companies, allowing investors to identify promising stocks with strong fundamentals regardless of the overall market sentiment or the year's numerical value. Such a strategy requires thorough due diligence and a deep understanding of the chosen companies' financial health and growth prospects.
Technically, the Sensex is currently facing resistance at the upper band of a rising channel established in June 2022, potentially leading to further profit-booking. However, a crucial support zone lies between 76,800 and 76,500, coinciding with the November 2024 low and the lower band of the rising channel. Axis Securities considers the 76,500 level as a critical support. Maintaining a level above this point could potentially trigger a rally towards the all-time high of 85,978, potentially even reaching 91,800 in the coming year. Conversely, a breach below 76,500 could trigger a drop to 70,200, the June 2024 swing low. This technical analysis underscores the importance of considering both short-term and long-term market dynamics when making investment decisions, alongside the fundamental analysis of individual companies. Investors are advised to adopt a cautious approach, focusing on stock-specific opportunities rather than relying solely on broad market predictions based on historical patterns or numerical trends.
Source: Sensex returns in odd years outshine even. What is the stock market outlook for 2025?