CHENNAI: We never needed it more: a Santa Claus rally. The big question is whether it will happen in 2008? Much like the Wall Street, history says Indian stock markets tend to rally from Christmas Eve to the New Year’s Day (or the first trading day of the New Year).

FIIs or mutual funds or big investors may not be bullish but if Santa has his way, investors will have something nice to finish the year, which saw Sensex lose over 50% of its value.

If investors want some hope, they can take heart from the fact that from 2000 onwards the sensex has never given negative returns for this period, which falls within the Yuletide.

Santa Claus rallies are said to happen as people tend to consume more, invest for tax breaks and more importantly, pessimists stay on vacation during this week, say experts. For the rally to happen in 2008, the start seems to be a little off the track with Sensex losing 240 point on Friday. But people haven’t lost hope.

“An encore of 2003, 2004 or even 2006 could see Sensex gain anything between 3% and 6%. The sentiment not withstanding, we never know what markets might throw at us,” an institutional head at a local brokerage said. A rally at this point could be a possibility because downsides from slowdown and lesser profits in third quarter are already there in the prices to a certain extent, he said. For a 6-7 day window that exists between Christmas Eve and the first trading of the New Year, Santa has made decent stops at the Indian stock markets.

source: Economictimes

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