nifty share price target: Has the annual Santa rally started on Dalal Street?

Has the annual Santa rally started on Dalal Street?

23 Dec , 2021 By : monika singh

NEW DELHI: The recovery on Dalal Street has extended to the third session on Thursday, making investors wonder whether the Santa rally has kick-started this year.

History suggests the market has delivered positive returns in the last 15 days of the year in nine of the past 10 calendars. Will the trend continue this time?

"I would love to believe that," said Siddhartha Khemka of Motilal Oswal Securities. “We are definitely hoping and longing for a Santa rally. But I think the upside can be limited from here.”

Data showed while the key US index, the S&P500, fell in six out of last 10 instances, Dalal Street has delivered positive returns in the fag end of the year for nine successive years now.

In 2020, the Nifty50 delivered a 2.2 per cent return in the last 15 days of the year. The 50-pack index gave a return of 1.7 per cent in 2019; 0.5 per cent in 2018; 1.9 per cent in 2017 and 0.6 per cent in 2016. However, it was down 1.9 per cent in 2011.
This year, while the three sessions to Thursday have brought in some respite, the index has been still down 0.75 per cent since December 15.

"There are various concerns in the near term and as we are nearing the end of Q3 — generally the festive season when the numbers are much awaited — last year, the demand was pretty strong. This year, as I said, the raw material impact on margins is taking the sheen away from the numbers. Yes, there could be some rally, especially after the kind of fall that we have seen in the market. But I do not see a huge upside in the near term," Khemka said.

Vinit Bolinjkar of Ventura Securities said a Santa Claus rally was typical at the end of the year as there would be a pre-empting allocation for the New Year. “But this time, we have a slightly diabolical situation where the interest rates are expected to rally very sharply and the US Federal Reserve is doubling up on its repurchases of T-bills. My entire focus is going to be on value and less on momentum and that is the way I want to play out," Bolinjkar added.