Sunday, December 29, 2013

How have the markets fared in the month of January?

The year is drawing to a close and we are nearing the key months of January to March. Typically, markets usually top out in these 3 months and if they dont top out then a major crash is seen in the month of May. Let us see historically how the month of January has fared for the markets?




1. The month of January usually sees the closing price of December violated at least once. Last year was an exception.1 also gets to see a price which is substantially lower than the closing price of December. With 2 trading sessions to go the closing currently is 6314.

2. The month of Jan has also seen huge swings on the downside with falls of 16 and 10 pc respectively. The gains have been 8 and 12 pc respectively.

3. When the month of December is positive, Jan is usually negative and vice-versa. Last year however was an exception to this rule.

4. Out of past 13 years, 6 have been positive January moths ad 7 have been negative. The years when the month has been negative, the degree of fall has been much more than the degree of rise when the month has been positive.

5. The average gain has been 5.5 % when the month is positive and the average fall has been 6.4 % when the month has been negative.

So what should our strategy be?

It should be buy on dips and if the statistics are correct, then 1 dip should come to around 6000-6100 levels which would be the time to buy quality stocks.

In the meantime, fixed income offers 9.01 pc tax free returns for the NHB bonds. Gold can be avoided at the current point of time.


2 comments:

  1. hi,

    earlier you were of the view 4800 will be a great buying opportunity

    do you still hold the view?

    regards
    rajamani

    ReplyDelete
  2. 4800 will surely come. Before 6900 or after 6900, I dont know. Best is to keep booking profits at higher levels.

    ReplyDelete