The benchmark Nifty has declined from a high of 24,858 level to a low of 24,180 level recently, but if one were to go by JM Financial a Santa rally is in the offing. The domestic brokerage believes the recent decline in stock market is offering investors an opportunity to assume a tactical long position over the next 3 weeks.
The brokerage said there is a higher probability of "Santa Rally' occurring between the last 2 weeks of the calendar year and the 1st week of the new calendar year -- December 15 to January 5, resulting into a broad-based buying in the overall market.
In the last 10 years, the NSE benchmark closed in the green on eight occasions. Only in 2018 ad 2022, the 50-pack Nifty settled lower in the two-week period, JM Financial said.
"The average and the median return stands at 1.5 per cent and 1.3 per cent, respectively. A move of less than 1.5 per cent and more than 1.5 per cent has been observed on 5 occasions each," the broking firm said.
In the case of midcap space, the trend is highly supportive. The Nifty Mid-cap index has settled higher on nine occasions. It settled lower in 2022 period.
"The average and the median return stands at 2.7 per cent and 3 per cent respectively. A move of less than 2.7 per cent and more than 2.7 per cent has been observed on 5 occasions each," it said.
In the terms of F&O stocks, an average of 67 per cent stocks in the F&O segment closed in the positive territory during the last 2 weeks of the calendar year and the 1st week of the new calendar year. The year 2017 witnessed a highest of 88 per cent stocks that closed in the positive territory. The only year where the majority of the stocks (74 per cent) closed in the negative territory was the year 2022.
Meanwhile, Hindustan Copper Ltd, Jindal Stainless Ltd, Jindal Steel & Power Ltd, Steel Authority of India Ltd (SAIL) and NMDC Ltd are a few stocks that settled higher in at least past eight of 10 Christmas/New Year periods, delivering an average return of over 6 per cent each. Others included Ashok Leyland, Berger Paints and Nalco.
Indian Bank Ltd and Union Bank Ltd were two F&O stocks that delivered negative returns on an average.