What should investors expect in December? Top 5 stocks to watch out for based on Seasonality Trend!

What should investors expect in December? Top 5 stocks to watch out for based on Seasonality Trend!

by 5paisa Research Team Last Updated: Dec 14, 2022 - 05:44 pm 45.2k Views
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As we enter into a new month, let us investigate the past performance of Nifty and try to analyze what lies ahead for the index.

The Nifty registered a fall of about 685 points in November 2021. That’s about a 3.90% fall from its October closing, which is also, the highest fall since March 2020.

The primary reason for such underperformance is the huge FII sell-off. The foreign investors sold Rs 39,901 crore in November month, the highest since March 2020. They have been selling aggressively especially towards the end of November. Reasons for such sell-off can be attributed to the interest rate hike, unsatisfactory inflation numbers in the US, and over-valuation in some sectors.

Comparing the performance of Nifty against the global indices, we find that Nifty performed at par with the global markets. Dow Jones declined 3.73%, FTSE declined by 2.22% and Nikkei was about 3.73% down. So, as we can see the overall global market is not performing well and the same is in our case.

So, what should investors expect in December?

Well, we might witness further fall if FIIs continue to remain net sellers. If they change their mind, we might see a consolidation phase for Nifty in the broad range of 16750-18000. Having said that, the historical trend indicates that the month of December is a merry one for the Nifty. On average the index has gained about 3.3% with the highest performance delivered in the year 2003. And, interestingly, in only one instance in the last five years, the index has delivered flat to negative returns in the month of December.

Here are the top 5 stocks to watch out for in December based on Seasonality Trend!

BirlaSoft: Historically, the stock of BirlaSoft has performed well during December. As out of 19 occasions it has managed to deliver positive returns on 17 instances. Moreover, the average change for this stock in October is 11.36% and the stock has witnessed consecutive positive years on 8 instances.

Fertilizers & Chemicals Travancore (FACT): The performance of FACT is similar to Birlasoft when it comes to positive closing for December as the stock has closed in green 17 out of 19 instances. However, average gains for FACT stands at 9.71% in December. Hence, market participants can keep this stock on their radar, as if history repeats itself this stock can do wonders.

Steel Authority of India (SAIL): The stock of Sail tends to perform well during December, as the stock has closed in green 17 out of 19 instances. The stock’s average return in December is 13.26%.

Jindal Steel & Power: The stock has managed to close in positive terrain 17 out of 19 instances in the past in December. The average return delivered by the stock in December is 12.91%.

SKF India: About the performance of SKF India, the stock has closed in green 16 out of 19 instances. But the average return in December stands at 8.17%.

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