Which was worse, October or March?

The 10th month of the Gregorian calendar ‘October’, which was originally the eighth month in the Roman calendar as ‘Oct’ in Latin means eight, has been labelled as one of the worst months for the stock market. There are certain historical instances that support this belief. For example, the stock market crash of 1987 in the US or decline in S&P 500 Index during the ‘Great Depression’.

In the case of the Indian market, the year 2008 saw Sensex declining by huge 23.9 per cent in the month of October, while the year 1992 also saw a fall of 14.2 per cent. This has created a premonition for market losses among investors when the calendar reaches the month of October each year. Even in the current year, the Sensex lost almost 5 per cent.



To understand which month has been the worst performing month in terms of stock market returns, we studied the monthly returns of Sensex since 1979. On the surface, we found that October remains one of the worst performers. On an average Sensex has given a negative return in the month of October.




Nevertheless, if we remove a couple of outlier instances of the year 2008 and 1992, the monthly returns of October turns to be positive. In order to get to the conclusion, we dig further into the data to know in terms of the number of times, which month has given a positive return and negative return. March turns out to be the month that has given more negative returns than any other month.

Therefore, despite October being portrayed as the worst month of the year for investors, it is actually March that seems to be the month when the investors should remain more cautious.