In one of our recent webinars, someone popped the question: “Should I cash in my profits because markets always take a nosedive in December?” Now, I’m no psychic, but I was pretty sure that wasn’t a hard-and-fast rule. Still, the idea sparked my interest in a little data detective work.

If, like me, you’ve ever pondered why December seems to get a bad rap in the market, here are some whimsical theories. Foreign fund managers wrap up their fiscal year in December (unlike us Indians, who wait until March), and they’re on a mission to secure those year-end bonuses. Picture them scrutinizing stocks, making sure they rake in the moolah. Then there’s the holiday mood factor – people locking in some cash to splurge during the festivities.

So, on a Friday evening, I handed the daunting task of data digging to a somewhat forlorn-looking intern. Of course, I threw in the classic “get it done by Monday morning” instruction – because who needs a holiday mood, right?

And here’s what our data sleuth unearthed for the Indian market, using BSE 500 as our market proxy. Drumroll, please!

Over the last 23 years, guess which month the stock market has risen the most times? Ding, ding, ding – December takes the crown! In 18 out of the past 23 years (uptil 21^st Dec this year), the market closed on a positive note in December – a whopping 61%. The runners-up in the positivity race are November, October, and July, each with 16 positive closures.

Now, the actual laggard in this race? January. It turns out, January is the month when markets tend to frown, closing down in 14 of the 23 Januarys.

Looking at median returns, July steals the spotlight with a cheerful 3.8%, followed by November at 3.4%, and December at a respectable 3%. Our not-so-beloved January? A median dip of -1.8%.

And here’s the kicker – we sliced the years into handy 5-year chunks (01-05, 06-10, 11-15, 16-20), and guess what? December consistently makes it to the top 4 performers in each period.

So, as I ponder the mysteries of January, my theory is this: Fund managers return from their holidays in a rather grumpy state, still riding the waves of festive cheer hangovers, waiting to pounce on the next big opportunity.

If you’ve got any other market myths you’d like us to investigate, drop us a line. Our data team is always up for a challenge!