Will Nifty Break the January Curse in 2024?

As we reflect on the past year, it’s undeniable that 2023 was nothing short of remarkable for Nifty. Despite the looming uncertainty that cast doubt on the bull-run, Nifty not only weathered the storm but delivered an impressive 20% return. However, as we stand on the cusp of a new year, the million-dollar question lingers in the air—what’s next? 

We are here to guide you in deciphering the probable trajectory ahead, with a keen focus on the upcoming January month. Let’s delve into the insights and strategies that will illuminate the path forward, ensuring you are well-equipped to navigate the twists and turns of the market. 

In the face of ambiguity, knowledge becomes your greatest ally. Join us as we unravel the intricacies of the market landscape and work together to discern the potential moves that lie ahead. 

The January Jinx: A Historical Perspective 

Nifty has delivered negative returns in January for the past five years, leading to the infamous “January curse.” But will 2024 be different? Here’s a look at the factors that could influence Nifty’s performance in the first month of the new year. 

The January curse is not just a recent phenomenon. Nifty has delivered negative returns in January 14 out of the past 20 years. Some possible explanations for this trend include: 

Profit booking: Investors tend to book profits at the end of the year, leading to a sell-off in January. 

Global cues: International markets, which are typically closed for holidays in December, often open lower in January, impacting the Indian market sentiment. 

Budget blues: The Indian Union Budget is usually presented in February, and concerns about the budget outcome can dampen investor sentiment in January. 

Reasons for Optimism in 2024 

While the historical trend is negative, there are reasons to believe that Nifty could break the January curse in 2024: 

Strong economic fundamentals: The Indian economy is expected to grow at a healthy pace in 2024, supported by factors such as rising consumer spending and infrastructure investment. 

Positive corporate earnings: Corporate earnings are expected to remain robust in 2024, driven by improving demand and cost control measures. 

Favourable liquidity conditions: Global central banks are expected to continue with their dovish monetary policy stance, which should provide ample liquidity to the markets. 

Levels to watch out for:  

These are the important levels to watch out for Nifty (21,600 – 21,022 – 20,231) 

Geopolitical: 

Central bankers need to glean valuable insights from the current global landscape, particularly concerning the potential inflation threat amid geopolitical tensions. Speculations surrounding US-China, US-Iran, and China-Taiwan relations, along with unforeseen historical events like the Russia-Ukraine conflict and the Israel-Hamas dispute, underscore the imperative for central bankers to maintain a high level of vigilance. 

Covid: 

The recent resurgence of Covid cases in specific regions adds another layer of complexity, reminiscent of the supply chain disruptions in 2020 that resulted in elevated prices. Successfully navigating these intricate challenges necessitates central bankers to remain highly attuned and adaptive to the evolving circumstances. 

The Verdict: Too Early to Call 

Whether Nifty breaks the January curse in 2024 remains to be seen. The market will likely be influenced by a combination of global and domestic factors. However, considering the strong economic fundamentals, positive corporate earnings outlook, and favourable liquidity conditions, there is a good chance that Nifty could deliver positive returns in January 2024. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.