“October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February."
- Mark Twain
One can't help but think of the famed American humourist at this time. It was precisely because of his well-known and much touted remark that the Mark Twain Effect was coined.
In some stock markets, the Mark Twain Effect is the phenomenon of stock returns in October being lower than in other months. In case you were unaware, both the famous stock market crashes of 1927 and 1987 occurred in this month.
In India, we have actually had bad luck with May. But it appears that we have now got bitten by the Mark Twain Effect too.
Three days ago, on October 16, everything looked fine when the Sensex and Nifty touched record highs. Fund managers were a happy lot. The NAVs of as many as 186 equity diversified funds and 27 tax planning funds touched their 52-week highs on October 16. Among the sector-specific funds, this feat was achieved by DSPML Technology.com and UTI Banking Sector.
But as is commonly said, cricket and stock markets are a game of uncertainties. Now, several equity funds, which had been basking under their highs, have climbed down to quite an extent. In just two days.
While the market has witnessed a steep fall during the last two days, due to FIIs panicking and pulling out, some funds' NAVs have dropped by as much as 9 per cent in 48 hours (October 16-18).
Top 10 losers from 52-week highs:
LICMF Equity (-9.4%)
Taurus Discovery Stock (9.38%)
UTI Banking Sector (-8.52%)
Taurus INFRA-TIPS (-8.48 %)
Sundaram BNP Paribas India Leadership (-8.48%)
Sundaram BNP Paribas Growth (-8.29%)
UTI Contra (-8%)
Taurus Starshare (-7.98%)
JM Financial Services Sector (-7.92%)
Taurus Bonanza Exclusive (-7.91%)
Funds which fell the least:
DBS Chola Global Advantage (-1.98%)
Escorts High Yield Equity (-2%)
ICICI Prudential Fusion (-2.99%)
ICICI Prudential Tax Plan (-3%)
JM Equity (-3.06%)
Templeton India Equity Income (-3.10%)
JM HI FI (-3.26%)
UTI Mid Cap (-3.28%)
Principal PNB Long Term Equity 3 Year Plan Series-II (-3.33%)
Principal Dividend Yield (-3.33%)
FT India Life Stage FoF 20s lost 3.18% and the largest index fund, the Banking BeES, was down 9.95% during these two days.
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