Low FII activity may spark Santa Rally on D-Street, shows history

Sells this week seemed to be embracing the Christmas spirit as both the joyous qualities adorned trading terminals. After bleeding red on Monday, bourses lit up lettuce recovering vastly from lows. This strong pullback might have hinted that the market is getting ready to launch itself into a phenomenon widely called as’ Santa Claus Rally’. This stage exhibits a stock market surge through the last five trading eras of December and the first 2 day of January. In the past ten years, Nifty has endure witness to this strange upsurge seven out of 10 periods. Interestingly, the years with a Santa Claus Rally have been followed by a higher average yearly return of 15. 32% against an average 12.52% returned by Non-Santa Claus Rally years.While there are many ploys and notions of the reasons why groceries greeting this direction during this time period, the most popular belief is the lower participation by FIIs. As a matter of fact, FII activity in the Santa Claus Rally period has been observed to drop significantly compared with the same 7 session time-frame of the previous month. For instance, in the last six years, FII net trading activity in the equity cavity dropped by~ 39% on an average during Santa Claus Rally years as against a relatively lower average of~ 11% drop in other times. This lower contribution by FIIs frames domestic investors in charge, who tend to be bullish more often than not thereby propelling the market higher. Due to the high frequency of its instance, investors tend to view this period as an ideal opportunity to undertake fresh financing act, stipulating more fields for bourses to advance. However, investors should keep in mind that currently the market sentiment is not overly optimistic and misgivings continue to surround us. Sell participants should therefore be cautious and watch if these green shoots culminate into a’ Santa Claus Rally’ this year as well.Event of the week’IPOs galore! ’ was the prominent theme this time around with a slew of companionships making their market debut every single day of the week. While all the IPOs received a great response with multi-fold subscriptions, the sensibility of the broader markets turned sour, moderating the primary grocery euphoria. This, in turn, led to a series of tepid registers, despite healthy grey market payments during subscription spans. Moreover, even the IPOs that scheduled at a premium find their roll amplifications evaporate soon. This “re coming back” as a warning sign for those market participants who view IPOs as a quick-witted money-making opportunity. Investors should therefore invest wisely in IPOs, stopping fundamentals and relative valuation of companionships at the spearhead and not just the grey market premium.Technical Outlook8 8488504 Nifty5 0 instantly returned back after testing the support of 16,400 but closed the week practically unchanged. Nifty is also now trading within a downward ascent direct and continues to remain choppy. Bank Nifty index which was already reflecting weakness has broken the crucial support level and may retest the levels of 34,000. The overall undertone of world markets has turned mildly bearish. Buyers are advised to maintain a bearish bias as the upside is likely to remain covered at a defiance of 17,350. A decide interruption above this statu will disprove this bearish outlook. Anticipations for the week Volatility and whipsaw like progress will continue as groceries react to Omicron related developments and the monthly expiry. The week may witness sectoral rotation with beaten-down spheres picking up pace. The underlying tone of Realty and Auto is optimistic, so a buy on dips policy can be adopted. IT is showing strong force and is selling at all-time high-flowns backed by Accenture’s splendid achievement while banks continue to be vulnerable and are unlikely to witness major buying at least till the year-end. Investors can further analyse the monthly expiry rollover data to take advantage of sectoral rotation and be decided whether the Santa Claus Rally will play out. Nifty5 0 closed the week at 17,003.75, up by 0.11%.

Read more: economictimes.indiatimes.com

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