nifty50 returns: Market Wonderland: Unwrapping smallcap secrets of Dalal Street

As Christmas lights twinkle and the festive vibe kicks in, we approach a widely recognized seasonal phenomenon in global financial markets — the Santa Claus Rally. This trend entails a notable upswing in the stock prices during the last five trading days of December and the first two days of January. Currently, the Indian stock markets are trading at lifetime high levels setting a perfect stage for the eagerly awaited Santa Claus rally.

The table below shows the Nifty50 returns during this period over the past 22 years.

The table below shows the returns of Nifty SmlCap 100 during these seven days over the past 11 years.

History tells us that the smallcap index tends to catch up during the Santa Claus rally. The above data reveals a consistently positive trend for the index over the past 11 years. Remarkably, this index has delivered positive returns every single year during the last five trading days of December and the first two days of January.

We can say that, during this period, retail investors enthusiastically engage in a buying spree, dancing to the merry tunes of the Santa Claus Rally.

The charts below showcase the fortnightly returns of Nifty SmlCap 100 for the latter half of December and the first half of January over the past 11 years. The index concluded positively in 9 instances during the second half of December and 7 instances during the first half of January within the same period.

While recent market fluctuations have seen a dip, including the small-cap segment, historical trends suggest a potential resurgence during the upcoming rally. Nifty SmlCap 100 has historically showcased resilience during this period. In essence, as we unwrap the layers of data and insights behind Small Caps’ December performance, we can say that the financial markets often present a gift in the form of the Santa Claus Rally, with small-cap stocks positioned to give a positive conclusion for the year.

Technical Outlook:

The Nifty settled at 21,349.40 down by 0.50% in a week.

Nifty ended its seven-week winning streak, signaling a pause in its upward movement. At the same time, global indices also displayed a slight slowdown in bullish momentum ahead of Christmas.

Technically, Nifty exhibited resilience by holding onto the crucial 21,000 mark following a sharp one-day decline and this level is now perceived as a strong support. The 20-day Simple Moving Average (SMA) is hovering around the 20,830 level providing additional support. On the higher side, if it breaks 21,600 then Nifty might attempt to test new highs around the 21,750-21,800 zone.

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