The effect of a positive January on the rest of the year

There is a Wall Street saying: “As goes January, so goes the year.” There is a merit in this. We may end the year higher.

At the beginning of every year you must have noticed that investors, market analysts, policy makers often debate the future of the market and come up with various theories - some interesting, some wild and some way too ridiculous – to predict whether our market is likely to end positive or negative. We decided to dig up some numbers, purely based on facts and have come up some very interesting findings.

Over the last 20 years of data, there has been a pattern which we not only notice in Indian markets but also the world over. The pattern which we call “January Effect” seemed to decide the fate of the markets at the end of the year. When the markets close positively at the end of January, and subsequently the year ends on a positive note as well, we call it the “January Effect”.

This is the first instance since 2007 that our markets have closed in the black in the month of January. Not only did the BSE Sensex close positively, but all major indices has ended positive as well. Will the close be positive for this year too? If history is any indicator, which, of course, must be treated with some scepticism, there might be good chance that this year might end on a positive note.

Let us take a look at our findings. Over the last 21 years, the BSE Sensex, during January, has been up 10 times and down 11 times. However, out of the 10 years it closed positively, the year eventually ended up on a positive note 80% of the time. In fact, the only years that the “January Effect” didn’t seem to conform were during the 2000-2002 period, when our markets were hit by the Ketan Parekh scam and the global dot-com meltdown.

If we look at the other side of the coin - the years markets closed negative in the month of January - the outcome was random - it was up 6 times while it fell 5 times. You would have been better off tossing a coin.

Take a look at the global markets over the last 21 years. The chart below depicts how closely the markets at the end of the year mirrors with how the markets close in January. In the past 21 years, the Chinese market (Shanghai Composite) ended up positive 11 times at the end of January. On 9 out these 11 occasions, a high correlation of 81%, the market closed positive at the end of the year.

NASDAQ and Dow had the same story to tell. In these markets, the yearend outcome closely followed that of January -- 78% and a whopping 92% respectively. Conversely, on 8 occasions when Dow was down in January, it ended higher 50% of the time – totally random.

During the last 21 years, when DAX, the German index, ended positive in January, it ended the year higher 75% of the time. Hang Seng closed up 77% of the time, while in case of FTSE the correlation was as high as 80%.

An emerging market like Mexico exhibited similar behaviour as well. The markets ended up on the positive note 80% of the time when the January was positive.

But if January delivers a big return, is anything left for the rest of the year? Interestingly, a positive January seemed to have a positive ripple effect throughout the year. For instance, out of 10 times BSE Sensex ended positive in January, the remaining 11 months continued to stay positive and delivered returns greater than January 50% of the time. Similar conclusions can be said of other indices as well. In case of Nasdaq the remaining 11 months delivered greater returns than January 10 out of 14 times, while Hang Seng had 7 out of 9 times where remaining 11 months trumped January’s; DAX’s ratio was 75%.




5 years ago





In Reply to krish 5 years ago

The low was 15,135.86
You want it to be accurate to the last decimal, is it? good luck
If you want to know more, pay Rs30 and read the magazine as I do. The website is free


In Reply to krish 5 years ago

it was explained
read everyday.
also read Baby Bull written 14 days ago

Corruption under MGNREGA cannot be ignored: Sonia

The Congress president said the government cannot ignore the complaints that are coming regarding the irregularities and corruption in the MGNREGA scheme

New Delhi: Pitching for immediate reforms in the Centre's flagship rural job scheme MGNREGA, Congress President Sonia Gandhi on Thursday said the complaints of corruption and irregularities regarding the scheme cannot be ignored, reports PTI.

Prime Minister Manmohan Singh and Ms Gandhi also expressed concern over delay in wage payment to MGNREGA workers, emphasising the need to ensure that they get it within 15 days.

"Talks about reform in MGNREGA are taking place for quite a long time. The time has now come that we implement them...We cannot ignore the complaints that are coming regarding the irregularities and corruption in the scheme," Ms Gandhi said addressing the MGNREGA Conference 2012 here.

Ms Gandhi said that she was happy that the CAG will also look into the expenditure under the scheme. "Corruption in MGNREGA is a great injustice to the country and a crime in respect of the Father of the Nation after which it is named," she said.

"We have achieved successes in MGNREGA in last six years but there are still many challenges before us. The biggest concern is to ensure timely wage payments to workers. For this, the banks and post offices will have to increase their reach. Our effort will be to ensure that the workers get their wages within 15 days," Dr Singh said.

Ms Gandhi said, “The delay in payment of their wages is illegal and unacceptable to us under any circumstances. We will have to ensure that MGNREGA workers get timely payment."

Flagging the challenges ahead in the implementation of the scheme, Ms Gandhi also pointed out, "There is unfortunately apathy towards it in some states especially those states, which are considered poor."

In an indication that the UPA's flagship scheme could undergo crucial changes in near future, Ms Gandhi wondered that while MGNREA is primarily a guarantee against poverty and employment in rural areas, whether it can be also used for bringing comprehensive reform in public health or managing natural resources in a better way in rural areas.

The Prime Minister also felt that MGNREGA could play a key role in all-round development of villages. "But for this, there will be a need to coordinate this scheme with other schemes for rural development," he said.

Rural Development Minister Jairam Ramesh said that the shortcomings and criticism of MGNREGA cannot be ignored and promised to bring changes and reforms shortly. "We have already discussed the issue with the states and will be making it public by the next month," he said.

Noting that lack of staffs lead to delays in completing the processes required for timely payment of wages to MGNREGA workers, the Prime Minister asked the states to give greater emphasis on resolving this issue.

Dr Singh was of the view that the full potential of MGNREGA has not been exploited till now and voiced confidence that if the scheme was run properly and implemented better at ground level, this can become a model rural development scheme.

The Prime Minister said a second green revolution could be facilitated by developing land providing irrigation facilities under MGNREGA.

"We desire that small farmers and poor families in particular benefit from this scheme. Hence, we have recently decided that works related to irrigation, farming and land development can be done on the land belonging to the SC, ST and BPL people," he said.

Dr Singh felt the rate of development will go up in the districts, where MGNREGA is implemented, reducing the reasons for which people sometimes adopt the path of violence.

Echoing similar views, Ms Gandhi noted that some changes should be brought in the scheme for Naxal-affected districts. She said that panchayats, which have primary responsibility for implementing MGNREGA, were being strengthened.

She said the scheme has helped arrest migration from the affected parts of the country as people were getting jobs closer to their homes.


Pfizer recalls 1 million packets of birth control pills

Pfizer said its voluntary recall is based on its own rigorous internal assessments of this problem, in which it found that the inactive or placebo pill may have been placed out-of-order in some packs

Washington: American pharmaceutical giant Pfizer has announced recall of more than one million packets of birth control pills after it found out that inactive or placebo pill may have been placed out-of-order in some packs, reports PTI.

"We have announced a voluntary recall of Lo/Ovral-28 (norgestrel and ethinyl estradiol) and Norgestrel and Ethinyl Estradiol Tablets (generic) birth control pills in the United States," the company said in a statement yesterday.

"We understand that this news can be very concerning and confusing for any woman who takes birth control pills to protect against unintended pregnancies," it said.

Pfizer said its voluntary recall is based on its own rigorous internal assessments of this problem, in which it found that the inactive or placebo pill may have been placed out-of-order in some packs.

"We believe there are approximately 30 packs of birth control pills that may have received an inexact count or inactive tablet," it said.

"Because of our high quality standards, should we identify even one package that does not meet our high standards, we will voluntarily recall the entire lot," the pharma company said.

Pfizer said it has voluntarily recalled the 28 lots - which is approximately 1 million packs - to ensure that any possibly impacted product is removed from pharmacy shelves - and women who use the product are alerted.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)