Many try to predict what the market will do based on something that may have happened some time in the past. Market prediction is one of the most difficult things to do because every year and situation is different. However, it is interesting to take a look at these patterns
Here we look at the famed “first five days of January indicator”. The story goes like this, if the market is up in the first five trading days of a new year, it results in positive returns for the entire year. Over the last 20 years, there have been 12 occasions where the Sensex has closed in the positive in the first five days of the calendar year. Out of these 12 occasions, the year itself was up 67% of the time. However, the other times when the first five days were negative, the year closed positive 63% of the time. Thus there is no significant pattern to say how the year would perform seeing the performance of the first five days of the year.
In the US, the pattern of trading in the opening week of the year is based on the assumption that money from pension funds, etc, is ready to flood the market and raise prices. For the Dow index, of the 38 most recent years that the first five days resulted in a gain, the year, itself, was up 86.8% of the time. The pattern is a bit less successful when the first five days are down.
Art Cashin, UBS head of trading at the New York Stock Exchange, in his piece on “Roller Coaster Commuting And Early 2012 Trading Patterns” takes a look at these patterns in the US. He mentions Jim Brown, a sharp-eyed investor who noted in this Premier Investor Newsletter, “Of the last 15 years there have been an almost even number of up days and down days (8-7) on the first trading day of the year. It is hard to see a trend there. If we extend it to cover the first week it remains a dead heat. However, if we look at the end of January compared to the first day of the year, the Dow is down 10 times and up only five. Looking even closer there was a significant sell-off in January 12 out of 15 years. In some cases they lasted only a week or so but they were normally significant program-driven declines. Once the year-end money was invested, a sharp sell-off appeared to capture profits. I speculate the hedge funds were invested ahead of the retirement fund pop for mutual funds and the hedge funds took profits when it was over. The pattern is very well defined.”
But is this case similar for India? Out of the last 20 years the Sensex has been down for the month of January, 11 times, so there isn’t much of similarity in the pattern with that of the US. However, we noticed some other patterns, during the first five days of the year when the Sensex closed negative, the month closed negative on 75% of the time. Out of the 12 times the Sensex has closed positive in the first five of days trade, the first month has closed positive on just 58% of the time.
Another pattern that we noticed is that when the Sensex closed negative for a year, the index was up 67% of the time in the first five days of the following year. When the Sensex has been up for the year, it has been able to post a gain in the first five days of the following year on just 57% of the time. In 2011 the Sensex closed negative, if it follows a pattern of the previous years, chances are we may see the index up by the end of this week from the start of the year.
This is a giant step forward for one of India’s premium brokerage houses that had earlier, for the first time, taken online trading from computer screens to phones with the introduction of midlet-based mobile applications in 2011.
HDFC Securities Ltd, a subsidiary of HDFC Bank, has come up with one of its kind trading engine for mobile phones. This is a giant step forward for one of India’s premium brokerage houses that had earlier, for the first time, taken online trading from computer screens to phones with the introduction of midlet-based mobile applications in 2011.
Now, HDFC Securities has come up with a range of Mobile Trading Apps that will open up trading opportunities for millions of people on the move and to those who don’t have access to trading portals. The apps will facilitate clients to trade, transact and receive market information anytime, anywhere. The mobile trading apps are available on Android, BlackBerry and Microsoft Window-based phones as well as on tablets. They provide enriched functionalities and features, thereby, giving customers enhanced trading experience on the move.
Customers could use these apps to place orders in equities and derivatives, get stock quotes, online hold/release of funds and securities, market-watches, track market movements and positions, place off-market orders etc. Aided by 256-bit encryption, the apps ensure that the transactions remain under foolproof security.
Jyotheesh Kumar, Head-Marketing, HDFC Securities, said: “HDFC securities has always been at the forefront of introducing pioneering technology applications in line with the consumer requirement. By the end of this month, our I-phone apps for phone and tablets would also go live for customers. Definitely we see mobile technology as a harbinger for growth.”
HDFC Life online term life insurance has premium rates 50% of its offline version, to make it competitive in the market. The online term life insurance market is heating up with more players entering the fray and existing ones planning to take the pricing further down. Is it a race to the bottom?
HDFC Life Click2Protect will beat its own term life insurance HDFC Life Term Assurance product by 50%. Imagine, a 27-year old existing HDFC Life Term Assurance customer shelling out annual premium of Rs11,294 for Rs50 lakh sum assured for policy term of 25 years. Today, HDFC Life Click2Protect will offer the same customer a premium of only Rs5,000 for same coverage. The customer will feel dejected but then be lured to give up the existing expensive policy and buy the new cheaper one. Unlike the Term Assurance plan which offers optional riders of accidental death and accidental disability, Click2Protect does not come with any riders.
The question is whether online sale without any agent make up for such a gigantic difference in the premium? It cannot justify the enormous variation; even though that’s the standard answer you will read or hear from the insurance company. Is there an assumption of online buyer living healthy lifestyle, having access to proper healthcare and hence will live longer? Time will tell if the assumptions stand true. The mortality experience of the product will tell if the premiums collected are enough or insurance company has hole in their pocket.
Aviva i-Life is the cheapest, beating the next competitor HDFC Life Click2Protect handsomely. Even though the current online term premium rates are good deal for customers, the competition is just getting started. Aegon Religare, which started it all with its innovative iTerm product, will soon cut its premium rates by 12% to 32%. Existing customers may be offered additional cover or rider to reimburse for the reduction in premium. The much-awaited online term plan this year will be from LIC.
HDFC Life Click2Protect has maximum maturity age of 65 years which is a drawback, considering that many insurers today offer term plan with maximum maturity age of 75 years. The maximum policy term is 30 years. The minimum sum assured is Rs10 lakh and maximum sum assured is Rs10 crore. The product offers free-look period of 30 days from the date of receipt of the policy. The cancellation will entail refund of premium after deducting medical expenses (if applicable), pro-rata cost for the period under cover and stamp duty.
A new product ICICI Pru Life iCare tries to address the major hiccup with the online term insurance buying process. The medical tests which online term insurance products require for all (or higher age groups) has been done away with this innovative product. There were issues like premium hike after medical tests which used to catch customers by surprise. This one-of-a-kind product will have no medical tests and no surprises of premium hike. This is an online term plan in complete sense.
Recent entrants like DLF Pramerica U-Protect and Edelweiss Tokio Life Protection have premiums which are the lowest in offline term plan space. Their premium is Rs5,956 and Rs5,984 respectively for Rs50 lakh sum assured for a 27 year old non-smoker male based in Mumbai for policy term of 25 years. Both the products are offline as of now.
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