great news: Merry Christmas! 85% chance of Santa rally in Nifty, shows history of two decades | Jobs Vox

NEW DELHI: Notwithstanding the recent stress in equity markets due to recession fears and rising Covid cases, the Santi Rally may make investors richer in late December if history is any indication. Market data over the last two decades shows that the Nifty not only has an 80% chance of closing higher in December, but there is also an 85% chance that investors will get Santa Claus.

Stock markets have a seasonal tendency to see stock prices rise during the last five trading days of December and the first 2 days of January. This phenomenon is known as the Santa Claus rally.

During this period of 7 trading sessions, Nifty has given an average return of 2% in the last 21 years from 2001-2002. There were only 3 instances in 2013-14, 2015-16 and 2017-18 when the index spoiled the festive mood.

While the largest decline was no more than 1.2%, the largest growth was 9% in 2003-04. Santa Claus 2021-22 saw the Nifty advance by 4.7%, data from Ace Equity showed.

December record

While the Nifty is down around 3% so far in December, the historical trend indicates that the holiday spirit may soon overwhelm the bears. In the last 20 years, Nifty ended positive in December 80% of the time. December has the highest average monthly return of 3.2%, Samco Securities said.

In the last 10 years, the Nifti 500 has given positive returns 80% of the time, with an average gain of 2%. With a success rate of 70%, Nifti Metal and Nifti IT gave average returns of 3.8% and 3.1% respectively during the period.

Among the metal stocks,

& Power has given an average gain of 7%, 10% and 6% in the last 10 months of December.

Among IT stocks, Persistent gained an average of 8%

4% and 5% in December over the past 10 years, Samco said.

What should investors do?

In addition to the hawkish stance of central banks around the world and growing fears of a recession among investors, the rising number of Covid cases in China is also dimming hopes of a Santa Claus gathering. Historically, the second half of December is seen as low-volume data as FIIs go on vacation.

“The markets are likely to consolidate in the near term and there will be no trend line movement on either side due to the lack of volume in the market.” The market could continue to rally which, with the budget eyeing the Indian markets,” said Kunal Shah of

.

Analysts say it’s a buy-on-decline market where the pace of buying may be less, but a big dip is likely to be bought.

With the Nifti showing very strong support near the 18,000 level, Prabhudas Lilladher’s Vaishali Parekh sees Santa picking up in sectors such as banks, financials, sugar and oil marketing companies over the coming weeks.

(With inputs from Ritesh Presswal)

(Disclaimer: The recommendations, suggestions, views and opinions of the experts are their own. They do not represent the views of The Economic Times)