December often sees positive returns for the Nifty due to a combination of year-end factors. These include portfolio rebalancing by institutional investors aiming to align with annual performance goals and the festive season’s impact on consumer demand, which boosts market sentiment. Additionally, global markets tend to perform well in December, creating a ripple effect on Indian equities. This month is also characterized by heightened liquidity as investors finalize year-end financial commitments, contributing to upward momentum in the markets.
In the years when December showed negative returns, external shocks and domestic challenges were predominant. Global economic slowdowns, such as the 2008 financial crisis, created ripple effects, impacting investor confidence. Domestically, policy uncertainties or significant regulatory changes have added to market volatility. Additionally, geopolitical tensions or unexpected disruptions in global trade and capital flows have played a significant role in dampening December returns during those years.