Santa Claus Rally 2025: The year 2025 is about to end and the month of December has reached its last stage. Preparations for Christmas and New Year celebrations are going on all over the world, but the eyes of stock market investors are fixed on only one thing, will they get the gift of profit from the market at the end of this year? In fact, according to market experts and historical data, a special kind of boom is often seen in the stock market in the last days of the year, which is known around the world as ‘Santa Claus Rally’. Investors are now desperate to know whether the history of the last 10 years will be repeated this time too.
From America to India, what is this ‘Santa’ connection?
As interesting as the concept of Santa Claus Rally sounds, its history is equally old. This term was first used in 1972 by Yale Hirsch, who was famous for creating the seasonal calendar of the stock market. They found that in the US market, there is often a bullish trend during the last 5 trading sessions of the year and the first 2 days of the new year.
The interesting thing is that this trend is not limited to America only, but its deep impact is visible in the Indian market also. A recent research report by Samco Securities shows that in India too, this ‘magical’ period of 7 days has often filled investors’ pockets. This is not just a coincidence, but a strong pattern based on data.
‘Small’ stocks became more prosperous than big stocks
The report prepared by Jahol Prajapati, Equity Research Analyst of Samco Securities, has analyzed data from 2015 to 2024. A surprising thing has emerged in these figures. During the Santa Claus Rally, small and medium companies (midcap and smallcap) have made investors richer than big companies (largecap).
Statistics bear witness that during this particular period in the last 10 years, the Nifty-100 index has given an average return of 1.78 percent. At the same time, BSE Midcap Index has earned 2.63 percent. But the best performance has been of BSE Smallcap Index, which has given a tremendous return of 3.55 percent on an average. In the year 2022, the smallcap index had jumped by 7.23 percent during the same period.
Smallcap has never disappointed in 10 years
The strike rate or success rate of the smallcap index during the Santa Claus rally has been 100 percent. This means that in the last 10 years, it has not happened even once when the smallcap index has given negative returns in the last 7 days of the year.
At the same time, the success rate of Nifty-100 and BSE Midcap Index has been 90 percent. Barring a slight fall in Nifty in 2015 and a slight slip in midcaps in 2018, every year the market has given a New Year gift to investors. This consistency is the reason why investors are able to muster the courage to buy at the end of December.
Why does the market rush during holidays?
This question must be arising in your mind that when most people are in the mood for holidays at the end of December, why does the market go up? Market experts believe that there are many psychological and technical reasons behind this. Apoorva Seth of Samco Securities says that at the end of the year, foreign institutional investors (FIIs) usually go on holidays, due to which the selling pressure in the market reduces.
Due to low trading volume, even a little buying pushes the share price up. Apart from this, there is a positive energy and new hope among the investors regarding the new year. Big domestic institutions also make purchases at the end of the year to make their books look better. However, the situation at the end of 2025 is a bit mixed. Nifty has slipped slightly from its record high and selling by foreign investors is a matter of concern, but the strength of domestic investors (DII) and SIP money is strengthening the market.
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Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money related decisions.
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