Some interesting observations about markets

[DIPIN]

Hello

We go back 17 years of market (BSE Sensex) history to assimilate data on bull market corrections. Here are the observations from history:

a)
There have been four bull markets over the past 17 years (including the current one) and within those bull market there have been 32 corrections of 5% or more (including the current one).
b) The average fall during these corrections has been 12% and average duration of these corrections is 17 days. The worst fall (May-June 2006) was 31% whereas the longest fall excluding the ongoing correction (July to September 1993) lasted 28 days. India has historically underperformed emerging markets during corrections and outperformed on rallies save for a couple of occasions.
c) The average realized inter-day volatility during corrections is 1.6% slightly more than the average during rallies. The subsequent rally post the correction produces an average return of 31% over 48 days.
d) The Sensex has fallen below its 200 DMA only on two occasions during these 30 corrections, i.e., in 2004 and 2006. Over the past 30 years, the market has penetrated its 200 DMA four times during a bull market with an average fall of 9.3% below the 200 DMA with the average time spent below the 200DMA being 46 days (excluding the ongoing correction).
e) There is no clear-cut message from the valuations at which the market troughs, i.e., the valuation range is 11x trailing earnings to 45 times with the average over 30 corrections being 20x trailing earnings. We are currently at 21x trailing earnings.

Through some website(morgan stanley)

Dipin Kwatra
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