Dec, Feb bode well for mkts

This could also be because of the festive season sales that happen in ‑ Diwali, Christmas, New Year ‑ through that quarter. The Street some times is very bullish and when the numbers come in line with expectations, the market just plunders. When the sales are higher than what the Street expects, the Sensex zooms up. That is what we have seen in the past.

Let us go to the probability of positive returns in January. It is 0.6, and that is why we said 50-50. In the previous 10 years, the probability has increased marginally to 0.67.

If the benchmark index ends positive, you may see a return of 7.6% offered in that month. That is a huge swing. In the previous 10 years, this 7.6% has come down to 5.8%.

If the index is entering into a negative territory, you see it offering 6% negative returns vis-à-vis the rest of the month, which is 5.8%. In the previous 10 years, negative monthly returns have boiled down to 5.1%. Both ways you see a big swing. If the month is positive, we see 7.6% positive returns delivered. If it is a negative month, we see negative monthly returns of 6% being delivered. So, that is the key out there.

On the FII front, we see FIIs usually buy in January. Historically, we have seen that December is the period of bonuses and they buy in January. But that no longer matters right now. Still the historical data suggests that throughout January, save 2005, FIIs have always bought in January.

So, a 50-50 month, anything can happen. The results season will start soon. We will have to wait and see what happens this month around.