Will history be repeated?
January 2012 had five trading Tuesdays and the month gave a big boost to the year 2012. January 2012 saw the SENSEX rise 1,738.63 points. If one were to compare this rise with what the rise has been in the whole of calendar year 2012 it is roughly 44% of the yearly rise in just one month. Of the rise of 1,738 points in January, 1,622 points were gained on the five Tuesdays in January. This accounts for a staggering 93.94% of the rise in January happening on the five Tuesdays in the month.
The gains in NIFTY were almost similar with Tuesdays accounting for 521.75 points or 90.75% of the total 574.95 points rise in January. The NIFTY gained a total of 1,284 points in the year. This means that 44.70% of the rise was accounted for by a single month.
I believe history will repeat itself and give below my reasons for the same. January 2013 is likely to see history repeat itself. The year starts with a Tuesday with the 1st of January 2013 being a Tuesday. It’s a trading day at the bourses in India while leading global exchanges would be celebrating the New Year. The Union Budget for 2013-14 would be presented in February 2012 and would be the last budget for UPA-II irrespective of when elections are held. The next budget would be a vote on account as there would not be enough time with scheduled elections to be held in April-May 2014. This means that the current budget would have measures to help the UPA win votes and return to power. A populist budget is not what cheers the stock market and post the budget we may not have the best of time in the market.
Secondly there are 9 states which would go to elections in calendar year 2013. These include the states of Delhi, Rajasthan, Madhya Pradesh and Chhattisgarh amongst others. The most unfortunate incident of a horrendous gang rape in Delhi and subsequent death of the girl have not gone down well with the people of this country. The government in its wisdom has chosen to remain fairly quiet and failed to address the issue where even the common man or woman on the street is demanding the enactment of strict laws which would make committing of such acts in future not only difficult but set an example with the highest type of punishment of death by hanging. The mood of the people is such that failure to act quickly could cause loss of popular vote for the ruling UPA.
In such a scenario one believes that the government would go all out to create a booming market in the period between now and the presentation of the Union Budget in February 2013. I suggest riding the rally which is likely in the period between now and the next 6 to seven weeks.
