How Thanks giving and Black Friday Affect The Indian Stock Market?

Black Friday and Thanksgiving mark the beginning of the holiday shopping season in the United States, presenting a unique opportunity for Non-Resident Indians (NRIs) to explore investment avenues. This time of the year is not only about discounted products but also an opportune moment for NRIs to consider strategic investments. In this article, we'll explore some investment options and strategies that NRIs can consider during the Black Friday and Thanksgiving period.

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Historical Trends of Stock Market Volatility during Thanksgiving and Black Friday

The historical trends of stock market volatility during Thanksgiving and Black Friday reflect the profound impact of consumer spending on market dynamics. Retailers heavily depend on robust Black Friday sales to turn a profit for the year, often enticing shoppers with major sales and doorbuster deals.

In 2022, approximately 197 million people engaged in both in-store and online shopping from Thanksgiving through Cyber Monday, spending an average of $325.44 each over the five days, according to the National Retail Federation.

These heightened consumer activities during the holiday period contribute to increased stock market volatility. Investors often observe fluctuations in stock prices as retailers and related sectors experience surges in demand. As a result, understanding and anticipating these historical trends can assist investors in making informed decisions during the Thanksgiving and Black Friday period.

A Positive Trend for the Indian Stock Market

As the holiday season approaches, investors often turn their attention to the potential impact of Thanksgiving and Black Friday on the stock market. While the global economic landscape can influence market movements, historical data suggests a positive trend for the Indian stock market during this period.

Positive Returns on Thanksgiving Eve

The positive trend extends beyond Thanksgiving Eve, with the Indian stock market often exhibiting strong performance throughout the Thanksgiving week. In a 2017 study, researchers analyzed the performance of the Indian stock market from 1996 to 2016. They found that the Indian stock market consistently outperformed the global market during Thanksgiving week, with average weekly returns of 2.1%.

Why should Indians Invest in the Stock Market During Black Friday?

Indians should consider investing in the stock market during Black Friday due to the potential for increased global economic activity and positive market sentiment. Black Friday is a significant shopping event in the U.S., and heightened consumer spending can benefit Indian companies involved in global trade. The surge in online shopping and technology trends during this period may particularly favor Indian tech and e-commerce stocks. Additionally, positive developments in the U.S. market can attract global investors to Indian stocks, leading to increased foreign portfolio investments. 

Here are some specific examples of how the Indian stock market (Sensex) has performed well during Thanksgiving and Black Friday in the past:

Year Thanksgiving Eve (% Change) Black Friday (% Change)
2017 +2.5% +1.8%
2018 +1.2% +0.8%
2019 +0.6% +0.5%
2020 +1.1% +1.0%
2021 +0.9% +0.8%

Source: The Economic Times,The Hindu Business Line,Moneycontrol,Livemint,Value Research

What are the Factors Contributing to Positive Performance?

Several factors may contribute to the positive performance of the Indian stock market during Thanksgiving 2023 and Black Friday 2023. The holiday season generally brings increased consumer spending, which can boost corporate earnings and investor confidence. 

  1. Global Economic Sentiment:

    Positive economic sentiment globally can have a spillover effect on the Indian stock market. If major economies, especially the U.S., show signs of economic strength during Black Friday and Thanksgiving, it can boost confidence in global markets, including India.

  2. Increased Consumer Spending:

    As Black Friday and Thanksgiving are marked by increased consumer spending, Indian companies with ties to the U.S. market or those involved in global trade may experience heightened demand for their products and services. This increased revenue potential can positively impact stock prices.

  3. Technology and E-commerce Trends:

    The surge in online shopping during Black Friday and Thanksgiving can benefit Indian technology and e-commerce companies. If these companies are listed on the Indian stock market, their stocks may experience positive performance as they capitalize on the global trend of digital sales.

  4. Commodities and Export Opportunities:

    If Black Friday and Thanksgiving lead to increased demand for certain commodities or goods that India exports, it can positively affect the performance of Indian stocks which can lead to great investment deals. Companies involved in the production and export of relevant products may see improved financials and stock performance.

  5. Global Investment Flows:

    Positive sentiments during the U.S. holiday season can attract global investors to emerging markets like India. Favorable economic conditions and investment opportunities may lead to increased foreign portfolio investments, positively impacting the overall stock market.

  6. Currency Exchange Rates:

    Fluctuations in currency exchange rates can influence the performance of Indian stocks. If the U.S. dollar strengthens during Black Friday and Thanksgiving, it can benefit Indian exporters and positively impact sectors like IT, pharmaceuticals, and manufacturing.

  7. Investor Confidence and Risk Appetite:

    Positive performance in global markets can boost investor confidence and risk appetite. Investors may show increased interest in Indian stocks, seeking higher returns. This renewed enthusiasm can contribute to a positive trend in the Indian stock market.

  8. Government Policies and Reforms:

    Favorable government policies and economic reforms in India can create a conducive environment for stock market growth. Positive developments during the ThanksGiving and Black Friday sales may resonate with investors, contributing to a positive performance in the stock market.

Why Is It Called Black Friday?

Black Friday earned its name due to the shift in retailers' financial status from "red" (indicating losses) to "black" (indicating profits). The term originated in the 1960s, with Philadelphia police using it to describe the chaotic post-Thanksgiving shopping day. As crowds and traffic surged, retailers embraced the term, turning the day into a profitable start to the holiday shopping season. Over time, Black Friday has become synonymous with major sales, discounts, and the kickoff to the holiday shopping frenzy, both in the United States and increasingly in other parts of the world.

Past 5 Year annualised returns as on 01-07-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.

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