Is A Stock Market Crash Coming In 2024? Here's What The Past 10 Leap Years Hint At

The addition of an extra day (February 29th) makes every fourth year a leap year for the world. Such is the case with the new year 2024 as well, which is a leap year.

While there is no fundamental reason as to why the stock market will behave in a particular way during a leap year, the past leap years' histories are too strong to ignore as we enter 2024. Loaded with an extra day, leap years have a history of hurting the Sensex and Nifty investors with significant crashes in 1992 (when the Harshad Mehta scam shook investors' faith), 2000 (the dot-com bubble), 2008 (global financial crisis), and then again in the COVID blow that jolted the market in 2020.

However, it is noteworthy that even if the stock market ended some of the past leap years in positivity, those leap years had their own share of downs when the market bled heavily, although it managed to recover overall in those years.

How Sensex Has Performed In Leap Years

ET

A study of market performance since 1984 shows that the average annual return in all 10 leap years has been less than 8%. On the other hand, the return in non-leap years has been much higher, at 23%.

1984

Up 7%

1988

Up 51%

1992

Up 37%

1996

Down 1%

2000

Down 21%

2004

Down 13%

2008

Down 52%

2012

Up 26%

2016

Up 2%

2020

Up 16%

Also Read: World's Biggest Stock Market Crashes Of The 20th Century

How Can Sensex's Performance In Leap Year 2024 Turn Out To Be?

pti

Its hard to imagine the stock market going down, given the good performance that the Sensex and Nifty have shown in 2023, especially the last couple of months wherein they breached new all-time highs multiple times.

While most of the history of leap years doesn't seem to paint a very positive picture for 2024, let us look at what analysts and experts are expecting from Sensex and Nifty in 2024.

While Kotak Institutional Equities expects a modest 1% rise in Nifty by December 2024, other brokerages have given targets going up to 23,000. The brokerage's fair value model shows the index is now close to 20% overvalued. "Thus, we do not anticipate a large upside to the index from this point. The most likely outcome for the index in the next 6¨C9 month period seems to be a time correction," said Kotak's Anurag Singh, as per the ET report.

Morgan Stanley expects India's stock market benchmark, the BSE Sensex, to hit 74,000 by December 2024.

On the technical side, Nifty charts indicate that the buying momentum may propel the index towards the 23000¨C23500 range. Since March 2020, there have been six instances of a 10% decline in the Nifty. Each one of them was followed by an average 25% return in subsequent rallies before a correction ensued, said Rajesh Palviya of Axis Securities.

moneycontrol

"Following a recent 7% correction, with Nifty declining from 20222 to 18837, applying the aforementioned analysis suggests a projection for Nifty in CY24 around 23,500," he said. Even the study of leap years shows that there have been exceptions in 1988 and 2012.

Also Read: How The Stock Market Crash Of 1929 Led To World War II

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