March 2020: An Unforgettable Month!

I couldn’t pick a better word than ‘unforgettable’ to define March 2020.

Ofcourse, another possible choice was ‘Bloody’ due to the sudden crash in Indian (and global) markets. But the speed and the sharpness of the fall was such that made it simply unforgettable. And I have seen the 2008-2009 phase. But this was something else.

And this reminds me of a quote attributed to Lenin – “There are decades where nothing happens, and there are weeks where decades happen.”

Sums up the month pretty well.

I wanted to capture the extent of what happened during the course of the month in words. But I then realize that using charts was a better option.

To put it in few lines, Nifty50 ended the month of March 2020 with a cut of -23.2%. Yes. That’s in just a month! And as I highlighted in an earlier post analyzing what happens after -20% fall in markets, this is a rare thing for Indian markets. Not too rare but happened just a few times earlier.

So here are a few charts that highlight this crazy month.

Chart 1: Day-by-day MTD (Month-to-Date) Returns for Major Index

MTD Returns Nifty Index March 2020

Few days before the month was about to end, there was a time when Nifty was down more than 32% for the month! Other indices followed suit with Small Caps being down by more than 40%. Remember these are just Month-to-date returns, i.e. just for the month of March 2020.

But last week of the month saw some recoveries and we eventually ended up -23.2% for Nifty. Though it fell by -32.1% at one time during the month.

Chart 2: March 2020 Vs Nifty Monthly Returns since 1999

Nifty Monthly Returns 2020 March

So as is very clearly visible in the table above, March 2020 was the 2nd worst month of last 20 years for most of the India markets. Worst being October 2008. But we very nearly did miss being the worst month ever. Had it not been for the recovery in the last few days, we would have ended up with the worst monthly returns ever.

Chart 3: March 2020 Vs October 2008 (Worst Month Ever)

Talking of the worst months, let’s see how March 2020 compares with the worst month ever – October 2008:

Nifty March 2020 Vs October 2008

Those are some scary red coloured grids! No doubt March 2020 was a deep red one.

Chart 4: Comparing 2008 Crash with 2020

And many have been comparing this sudden fall of 2020 with the 2008-2009 stock market crash. Please remember that the 2008 recession saw Indian markets falling by 50-60% in a matter of 14 months, i.e. from Jan 2008 to Mar 2009. So we are still not there from a time perspective. But the fall has been steeper this time. Here is how this fall (2020) compares with that of 2008:

Nifty 2008 Vs 2020

How to read the above graph? It compares the value of Rs 100 when invested at the start of Jan 2008 vs Jan 2020. As the blue line in the graph shows, it went down by more than 50%. The red one (which shows the current fall) is still around 65-70, i.e. we have fallen about 30% from the start of the year.

In a short while, I will also highlight how the valuations have dropped suddenly and how it compares with the valuation drop in the 2008 recession.

Chart 5: How much Nifty has fallen from All-Time-Highs?

And just to show how brutal has been the fall since we made a new All-Time-High in January 2020, here is the fall in drawdown terms, i.e. fall from the All-Time-High (ATH) in % terms:

Nifty Drawdowns 2020

Now let’s move on to the valuations.

Chart 6: Nifty50 PE Ratio (Standalone) – Monthly Averages Since 1999

Here is how the Nifty’s monthly average PE has been in past and how it compares with the month of March 2020:

Nifty PE Ratio March 2020

We ended the month on a Nifty50 PE 19.38 (as on 31st Mar 2020). This is much lower than what has been the norm in the last 2-3 years of the high 20s. The fall in valuation has been dramatic but ofcourse in line with fall in markets as well. At one time, in the month, it was for the first time in the 17-18 band after a gap of several years.

Chart 7: Nifty50 PE Ratio last 12 Months

And here is how the PE has worked its way around in last 1 year and eventually crashing down to under 20.

Nifty PE FY2019 2020

Chart 8: Nifty50 PE Ratio, Max, Min, Avg & Index Levels in Last 1 year

Here is a tabular representation of how Nifty50 has moved in the last 12 months. In this table, we highlight the index’s highs, lows, within each of the 12 months and how PE has changed across this period of last 1 year:

Nifty High Low PE 1 year 2019 2020

The last row shows (very clearly) how things have suddenly changed. The index fell by 23.2%. And valuation fell to a multi-year low of 17.2 before ending at 19.4 (which too is a very low figure compared to what has been happening in the last few years).

Chart 9: Nifty50 PE: Crash of 2008-09 Vs 2020-21

As mentioned earlier, here is a comparative depiction of how Nifty PE fell during both periods, i.e. in the recession of 2008-09 and in the current carnage of 2020:

Nifty PE 2008 Vs 2020

Note – Do read this Nifty PE Vs Return Analysis (20 years) to understand how PE is one of the clear indicator (among few) of how much returns you can expect if you invest at different PE levels. This is ofcourse a simplistic statement but take it in that spirit.

And to complete the valuation piece as I have been doing for the last several years on a monthly basis (via State of Indian Stock Markets), here are Nifty’s P/BV and Dividend Yield trends:

Chart 10: Nifty50 P/BV (Monthly Averages)

Nifty P BV Ratio March 2020

Without doubt, on the Price to Book Value front, the index is indeed available at a multi-year cheap valuation now.

Chart 11: Nifty50 Dividend Yield (Monthly Averages)

Nifty Dividend Yield March 2020

That was about all the key index level valuation parameters. I must remind everyone that you should never use just 1-2 parameters to make investment decisions. So please digest the above data in that spirit.

Chart 12: Nifty Indices YTD & 1-Year (FY) Returns

I just wanted to leave you with a chart that shows how various indices of Nifty (read about different Nifty indexes) have performed since the start of 2020, i.e. from 1st Jan 2020 and since the start of FY2020-21, i.e. from 1st April 2020:

Nifty Indices YTD FY Returns 2020

It’s clear there was no place to hide in the markets. The sword cut deep and everywhere!

That’s I think is more than enough. I have shared 12 charts/tables to highlight what a month it was. There is no doubt that it has been a brutal month. More for those who had a high equity allocation in their portfolios.

I keep getting emails from people about how this is going to pan out. Will it fall more? Will we recover? The answer is that I don’t know. I have already shared my detailed view with my clients and also written something for everyone else (when market falls, don’t forget). But for a long time, I had been saying constantly that we as a market were gradually getting closer to the edge. Generally, markets don’t fall due to valuations alone. They always need a trigger (push). And you can now see how this COVID 19 pandemic has triggered what we feared.

But let’s see how things go on from here. It has been a tough month for all of us (except perfect market timers and liars). It has also been an opportunity to deploy some money in equity as an asset class (and selectively). It’s possible that we may go lower. It’s possible we may recover soon. Fingers crossed.


  1. Nice piece, Dev. The only way to handle equity volatility is to have a fixed asset allocation and do regular re-balancing. It is a bit easy to book profits from equity, but mighty tough to add money to stocks in times like this when your sizeable equity portfolio is bleeding by like -30%. But there are no easy ways to stay ahead of inflation. Behavioral finance is what we should all be worried about.

    Benjamin Graham nailed it when he said ‘The Investor’s chief problem – and even his worst enemy – is likely to be himself. Hell, atleast I can boast years/decades later that I added another 6 lks more after losing 12 lks in the 2020 crash. And I won! (hopefully). Plus I have a 10 yr horizon anyway.

  2. Superb charts Dev. I like quantitative information and very few people gives it and your comparison of 2020 vs 2008 is damn good. Hats off for the wonderful post.

    This crash has taught me few things and let me share those things.

    Diversification of investments is must. One should have RE, Gold, Equity, Debt and Tax Savings. One shouldn’t go overboard on any asset class.

    My respect for debt gone up especially govt schemes like PPF, Post Office, NSCs, KVPs and so on. For people beyond 50, earning 7-9% as passive income is not a bad idea that too without worries.

    Even with this crash, we are always in confusion whether to get into NIFTY FMCG which is down by 10% or NIFTY Bank which lost 40%. Leave sectoral indices, I am sure many investors must be going through the crazy period of choosing the stock that fallen over 10% or 70%. Some might be feeling let me choose that has fallen over 20% and others might pick the one which fallen 50%. Only time will tell who is correct.

    Another issue that is bothering many is, would there be any further correction in Apr’20. I am not really sure how many investors are prepared for NIFTY 50 to a levels of 6000 which if it happens makes the 2020 correction as the historic.

    Looking at the DII data and individual domestic investors, while it is good to see that many considers this as an opportunity to invest and I have seen first timers in the market which is a good trend. In 2008 crash fear factor that I had witnessed, haven’t seen this time which is again good and could be due to better education atleast on personal finance side. The only thing is where this crisis leads the market. My guess is the real fear factor and massive MF redemption pressure might come around when NIFTY 50 hits 7000 mark.

    Guys, we are in lockdown and am sure most of us has got more time than usual and post your comments as much as we can for such wonderful posts. This is the only thing that we can do in return for the author who worked hard to produce such a master piece.

  3. Perfect analysis Dev. I am a regular reader of your web articles. Most often your views concur with mine and are perfectly articulated in your articles.

    I am adding stocks as much as I can. I have noticed two things by looking into my portfolio and historical values of p/e, p/b, div. Yield of current and historical times.

    1. Majority of my holdings now is concentrated in small and micro cap segment. Weighted avg. MCap may be around Rs. 1000 cr. (primarily because there are more values than top 200 stocks. And also due to mid cap becomes small cap and small cap become micro cap. (Note: I have around 170+ extra-diversified stocks in my portfolio and about 80% of them have p/e less than 6 and ROE more than 15%).
    2. I may safely say that market is very close to bottom 20% range of expected nifty level in terms of nifty 50 or nifty 500 p/b and div. yield but may be not in terms of p/e values if we campare it with 2008 crisis. I am also fully aware that this time cause of fall is very different than earlier ones as was always case for other large devastating falls in history.

    I like very much your way of thinking. Thanks for facilitating the decision making process for investors like me. Good luck.

  4. Diversification of investments is has to. One should have Gold RE, Equity, Debt and Tax Savings. An individual shouldn’t go forward on some other asset class. It always be diversified selection.

  5. Absolutely wonderful numbers and charts. Always loved your quarterly/ annual graphs and analysis. Was waiting for this crash for some time and hope to see more greener cells rather than the yellow and red which had been the norm for several years now. If corona doesn’t kill us, this should be the one in a lifetime opportunity to invest for your real harvest for your long term future.
    Keep going sir. God bless.

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