{"id":40890480,"date":"2025-12-17T16:58:07","date_gmt":"2025-12-17T11:28:07","guid":{"rendered":"https:\/\/stockviz.biz\/index.php\/?p=40890480"},"modified":"2025-12-17T16:58:07","modified_gmt":"2025-12-17T11:28:07","slug":"macro-timing-the-nifty-50","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2025\/12\/17\/macro-timing-the-nifty-50\/","title":{"rendered":"Macro: Timing the NIFTY 50"},"content":{"rendered":"\n<p>Prior research has shown that there is no correlation between GDP growth and stock market returns (see: <a href=\"https:\/\/www.northerntrust.com\/content\/dam\/northerntrust\/pws\/documents\/commentary\/investment-commentary\/the-enigma-economic-growth-and-stock-market-returns.pdf\">The Enigma of Economic Growth and Stock Market Returns<\/a>). <\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"606\" height=\"367\" src=\"https:\/\/portalvhds29z8xdrqhczq.blob.core.windows.net\/wordpress\/2025\/12\/image.png\" alt=\"\" class=\"wp-image-40890481\" srcset=\"https:\/\/portalvhds29z8xdrqhczq.blob.core.windows.net\/wordpress\/2025\/12\/image.png 606w, https:\/\/portalvhds29z8xdrqhczq.blob.core.windows.net\/wordpress\/2025\/12\/image-300x182.png 300w, https:\/\/portalvhds29z8xdrqhczq.blob.core.windows.net\/wordpress\/2025\/12\/image-250x151.png 250w\" sizes=\"auto, (max-width: 606px) 100vw, 606px\" \/><\/figure>\n\n\n\n<p>GDP is a trailing measure. However, does the relationship change if we use leading economic indicators?<\/p>\n\n\n\n<p>To answer this question, we look to the OECD Composite Leading Indicator database. It is a monthly time series of CLIs of different regions. Here&#8217;s India&#8217;s and the G7&#8217;s charted from 1980:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/github.com\/stockviz\/blog\/blob\/master\/oecd-cli\/india-g7.oecd-cli.png?raw=true\" alt=\"\" \/><\/figure>\n\n\n\n<p>If we scatter India&#8217;s CLI with next month&#8217;s NIFTY 50 returns, we get:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/github.com\/stockviz\/blog\/blob\/master\/oecd-cli\/india-cli.vs.nifty50.png?raw=true\" alt=\"\" \/><\/figure>\n\n\n\n<p>No correlation whatsoever.<\/p>\n\n\n\n<p>However, we know that the market <em>likes<\/em> growth. So, what happens if we scatter the diff of the CLI over returns?<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/github.com\/stockviz\/blog\/blob\/master\/oecd-cli\/india-cli-diff.vs.nifty50.png?raw=true\" alt=\"\" \/><\/figure>\n\n\n\n<p>Noisy, but not hopeless!<\/p>\n\n\n\n<p>Turns out, if you go long NIFTY 50 only when the CLI is <em>improving<\/em>, you get a 2% boost over the long run return.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/github.com\/stockviz\/blog\/blob\/master\/oecd-cli\/india.accel.png?raw=true\" alt=\"\" \/><\/figure>\n\n\n\n<p>The kicker here is that the drawdowns are a lot less severe.<\/p>\n\n\n\n<p>Code and charts are on <a href=\"https:\/\/github.com\/stockviz\/blog\/tree\/master\/oecd-cli\">github<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Prior research has shown that there is no correlation between GDP growth and stock market returns (see: The Enigma of Economic Growth and Stock Market Returns). GDP is a trailing measure. However, does the relationship change if we use leading economic indicators? To answer this question, we look to the OECD Composite Leading Indicator database. &hellip; <\/p>\n","protected":false},"author":2,"featured_media":2106273,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3471],"tags":[3481,2761],"class_list":["post-40890480","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing-insight","tag-macro","tag-quant","entry"],"_links":{"self":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/40890480","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/comments?post=40890480"}],"version-history":[{"count":0,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/40890480\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media\/2106273"}],"wp:attachment":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media?parent=40890480"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/categories?post=40890480"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/tags?post=40890480"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}