Experts believe there is a high chance of the market going negative this month due to the March effect. The market has given a negative return almost every March for the past 25 years. In comparison to other months, March has shown the most negative returns. This does not happen randomly, and experts believe these reasons are the leading cause of it.
1.Tax
For payment of your advance tax for the year, March 15 is the date. Some companies may hold it at the end of the year to pay the tax and make quarterly payments throughout the year,
but companies or individuals pay their remaining amount of tax during this time of year. This can cause people to sell their stocks and mutual funds to raise cash.
2. Profit And Loss Booking
Someone who is sitting on a high level of realized gains and has losses in their portfolio may want to book those losses and gain lower tax liability, or if they have realized losses in their bag, they will book their profit by selling the winning stocks to balance things out for tax purposes.
3. Cash
Companies at the end of the financial year would like to show they have plenty of cash and less risky assets or investments, so they sell their stock to get more cash in their hands for their annual financial statements, then they buy new stocks at the start of the new financial year.
4. RBI And SEBI
Finance regulators like the RBI and SEBI may sometimes introduce new orders or rules that might affect the market. For example, they might ask mutual funds to invest in less risky stocks or restrict some activities, like giving loans against stocks
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies and not of TheStockMarketLive. We advise investors to check with certified experts before making any investment decisions.TheStockMarketLive. We advise investors to check with certified experts before making any investment decisions.