Cyclical Patterns in BSE Sectoral Index

Pallavi Mishra

Cyclical deviations in economic activities such as production, distribution and consumption are a regular and familiar phenomenon. Routine and recurring phenomenon taking place at some expected time gap, which may produce returns that are abnormal or excess, is termed as seasonality. This effect could be of several types like quarterly, monthly, weekly, day-of-the-week, month-of-the-year, holiday effects etc. Beyond countless cyclic effects, a very popular market maxim is the Halloween effect or “Sell in May and go away”. This idea shot from an effortless discovery that commonly, stocks give returns approximating to zero from May through October, though offering a premium for the risk barely from November through April. This irregularity could be improved, and turned more advantageous as per the various studies carried out in this area. Furthermore, this outcome is universal, given that this pattern is there in more or less all countries of the world. For several years this seasonal gauge emerges to be a very influential timing tool in the stock market. The present study aims to explore the existence of seasonality in the Fast Moving Consumer Goods sector in the stock market of India by employing Linear Regression and paired ‘t’ test. The outcome establishes the presence of cyclic fluctuations in the particular sector in India and anomalies in Indian Stock Market. The Indian stock market was confirmed to be inefficient which allowed investors to time their investments and enhance their returns.

Volume 11 | 10-Special Issue

Pages: 152-158

DOI: 10.5373/JARDCS/V11SP10/20192786