Testing December Trade for Nifty
There is a conception in market that there is a Santa Claus rally in December. For this month we are not even just 1.5% up till now and only 2 weeks are remaining.
I will try to quantify if there is any truth for Nifty about the Santa Claus Rally. Here are the few of questions I will try to answer the following questions:
1. Is there any Santa effect on Nifty?
2. When is the best time to buy for Santa rally?
3. What is the effect of yearly change on Dec returns?
Lets get the answer.
Santa Effect: Well there is a Santa effect on Nifty. But the time effect is not there in the December month.
The index has given +ive returns for 13 years for month of December in last 16 years. That’s a really good seasonal trade. The best here is average return for this month. It is 5%.
Now coming to timing the rally. Well it seems that there is no such trend for Nifty, while there is such a trend for western international indices. The international Indices do show seasonal +ive trend for 3rd week of December but such a trend is missing in India.
Though we cannot time the trade by weekly basis but if we buy at lows then this is the best trade. Now when to buy the lows.
Doing the past analysis it shows average lows of 3-4% from opening price for last16 years. But it is highly skewed data. The best buy point is about 2% low from the opening price.
Now lets see if there is any yearly change effect on Dec returns.
The trend shows that the more bullish a year is the more bullish December month is and vice versa is also true sometimes.
This year we are already 14% +ive for the year and December is now 1.5% +ive and the low was at -2%.
Conclusuion: The analysis shows that the index has been bullish during December month and the lows of about 2-3% can be bought for good upside returns.
There is a conception in market that there is a Santa Claus rally in December. For this month we are not even just 1.5% up till now and only 2 weeks are remaining.
I will try to quantify if there is any truth for Nifty about the Santa Claus Rally. Here are the few of questions I will try to answer the following questions:
1. Is there any Santa effect on Nifty?
2. When is the best time to buy for Santa rally?
3. What is the effect of yearly change on Dec returns?
Lets get the answer.
Santa Effect: Well there is a Santa effect on Nifty. But the time effect is not there in the December month.
The index has given +ive returns for 13 years for month of December in last 16 years. That’s a really good seasonal trade. The best here is average return for this month. It is 5%.
Now coming to timing the rally. Well it seems that there is no such trend for Nifty, while there is such a trend for western international indices. The international Indices do show seasonal +ive trend for 3rd week of December but such a trend is missing in India.
Though we cannot time the trade by weekly basis but if we buy at lows then this is the best trade. Now when to buy the lows.
Doing the past analysis it shows average lows of 3-4% from opening price for last16 years. But it is highly skewed data. The best buy point is about 2% low from the opening price.
Now lets see if there is any yearly change effect on Dec returns.
The trend shows that the more bullish a year is the more bullish December month is and vice versa is also true sometimes.
This year we are already 14% +ive for the year and December is now 1.5% +ive and the low was at -2%.
Conclusuion: The analysis shows that the index has been bullish during December month and the lows of about 2-3% can be bought for good upside returns.
No comments:
Post a Comment