This graph suggests December can deliver solid returns to investors. Here's how

The Santa Claus rally came early to Dalal Street this time, with the BSE benchmark Sensex and the NSE barometer Nifty scaling their fresh all-time high on December 1. If history is to go by, the month favours the bulls, hands down. In the past 20 years, Nifty gained in Decembers in 80 per cent of the times. Among the 12 months of the year, December also has the highest average monthly returns of 3.2 per cent, according to a study by Samco Securities. 

It has been followed by July when Nifty closed on a positive note in 75 per cent of the times in the past 20 years. The average monthly return for July stood at 2.3 per cent. With a 2.6 per cent average gain, September is the second-best month in terms of average return.

On a broader basis, the Nifty 500 has delivered positive returns 80 per cent of the times in Decembers, in the last 10 years, with an average gain of 2 per cent, according to Samco Securities. The Nifty Metal, Nifty IT, Bank Nifty, Nifty Auto, Nifty Energy and Nifty Financial Services have also ended in the positive zones 70 per cent of the times during the month in the past 10 years. On the other hand, Nifty Pharma and Nifty Realty delivered a positive return 60 per cent of times in December in the past 10 years.

What's next?

Overall, the ongoing year so far stood highly volatile for the domestic equity market. The BSE Sensex and NSE Nifty have gained nearly 8 per cent so far in 2022. A couple of factors including the geopolitical crisis between Russia and Ukraine, volatile inflows by foreign institutional investors and rising interest rates kept sentiment jittery throughout the year. Meanwhile, the 30-share index Sensex and the 50-share index Nifty managed to scale their respective lifetime highs of 63,583.07 and 18,887.60 on December 1, 2022.

Well-known equity investor Safir Anand believes that the market should be in a better position in 2023, especially if the global supply chain and logistics are sorted out and inflation which is showing some signs of easing gathers more ease than stress. “Most of the US Fed impact will also be in the system and India should show a sweet capex uptick. I expect a 15 per cent rally in 2023 unless we have a black swan,” he added.

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