Will 'Santa Rally' deliver Christmas cheer to Indian markets? Experts weigh in

Mumbai: Equity markets traders may be in for some Christmas cheer as analysts said a 'Santa Rally', a seasonal year-end upmove, may be on course, supported by multiple technical cues. In the past 30 years, the Nifty has gained in 23, or 77%, of the occasions in the period from December 20 to the year-end, according to a study by ICICI Direct. The average returns in these instances were 2.8%. "This year-end momentum seen in more than 75% instances in the past three decades underscores the strength of the seasonal Santa rally," said Dharmesh Shah, head of Technicals at ICICI Direct. In the last two trading sessions, the Nifty has already moved up nearly 0.81%. It ended at 26,177.15 on Tuesday in flat trade.126150535 Chandan Taparia, head of Technical and Derivatives Research at Motilal Oswal Financial Services sees the Nifty advancing by another 1-1.2%, targeting levels around 26,500 over the next few days. "The market has been forming a higher base over the past few sessions, suggesting that benchmark indices could see further upside in the near term," he said. "Sentiment is supported by stable global cues, a subdued volatility index with the VIX below the 10 mark, and moderating FPI outflows, all of which point to a continued up move over the coming sessions." The Volatility Index is at 9.38 - near its all-time lows, suggesting traders see limited risks in the market in the near term. It hit record lows of 8.8 on Monday. Taparia said the low VIX also indicates that broader momentum may remain muted, with market action likely to be more stock and sector-specific, particularly in autos, capital markets and consumption stocks. Shah said the technical indicators point to strength beyond 2025. "This sets the stage for the index to not only challenge the All-Time High but also march towards 26,700 marks in the coming weeks," he said.