Dalal Street: Don’t count on January for a Happy New Year

Will January be any different this time? A spate of ordinances, coupled with expectations of a rate cut in February and a reformist Budget, may keep the mood upbeat on Dalal Street. But history shows the first month of a year has been usually lacklustre.

In almost every year in the last decade, the average return from Nifty in January has been the lowest — it has, in fact, been negative in seven out of the 10 years. FII inflows, too, are the least in January: the monthly average (over the last 10 years) has been Rs 1,046 crore in Jan compared with a monthly average varying between Rs 10,148 crore in September and Rs 1,176 in August.

Experts attribute the low January returns to two reasons: One, global fund managers artificially inflate NAVs of their funds in December, setting a higher base for the market in January, and, second, fund managers decide on allocations for the year for various markets – a trend that is slowly changing.