Relief Rally In December? CLSA's Vikash Jain Banks On Historic 3% Median Returns For Nifty - Details

Research firm CLSA, on Wednesday, noted that the current investor sentiment on the Indian equities is bearish, but added that December should drive a relief rally. A report by CLSA's Vikash Kumar Jain and Adarsh Agarwal said that the month of December has a 'great track record' with Nifty closing positive on three of the four times with a median 3% return.

CLSA Report on India: December has a great seasonal track record

"Seasonal trade supports at least a relief rally in December. The month of December has a great seasonal track record with the Nifty closing positive nearly three-fourths of the times over past 30 years and with a 3% median return," Jain's report said.

Noting that the light India positioning for FIIs at a time when the outlook for China has become uncertain, the CLSA report noted that the domestic equity inflows remain steady, which 'should help drive at least a relief rally before we face the disruptions under President Trump through 2025'. Among others, the report also cited poor earnings performance by D-Street participants as one of the reasons behind the current bearish sentiment among investors. 

CLSA Report on India: Government spending is expected to pick up

Among others, the report noted that government spending is expected to pick up providing the necessary tailwinds to the Indian markets.

"A YoY decline in discretionary expenditures by the government in 1HFY25 has hurt growth. With state elections ending and the rainy season done, we see a 14% YoY jump in 2H to meet the annual budget and may help growth," the report said. The CLSA report on Indian markets comes at a time when indices have been under tremendous selling pressure. From its all-time high of 26,277 on September 27, Nifty is down 10 per cent dragged by relentless selling by the FIIs as well as geopolitical tensions.