India VIX shows positive ratio of 75 per cent for January; all eyes on auto stocks!

The year 2020 would be listed as one of the most horrible years of humanity as we experienced what was not witnessed in the last hundred years i.e. the Coronavirus pandemic.  

However, paradoxically, 2020 turned out to be one of the best years for the stock markets. During this year, we saw one of the shortest & sharpest bears’ markets and a V-shaped recovery with Nifty touching the milestone of 14,000 mark on the final trading session of the year.     

Nifty clocked gains of nearly 15 per cent for the calendar year 2020 and with this, it has posted its best annual gain since 2017, aided by unprecedented liquidity. In 2020, 68 per cent of Nifty 50 components had delivered a positive return with the top five gainers belonging to the pharmaceutical and IT sectors.   

We are starting the New Year 2021, similar to the way we did in 2020, with hope and anticipation of improvement in economic data. As we step into the first trading month of the year 2021, we would like to share an interesting fact with our readers as this will help you to plan your strategies accordingly. As per seasonality analysis for the month of January, India VIX has a positive ratio of 75 per cent and if we dig deeper, we would get to know that since 2014, the month of January has always witnessed an uptick and there are five instances when India VIX surged in double-digits in the month of January since 2014 with 49 per cent being the highest, which we had witnessed in 2020.  So, be cautious and trade with a proper plan.     

SGX Nifty is indicating a flat start to the New Year 2021 as it is trading with marginal gains of 4 points at 14,020 amid the absence of any major cues from the Asian peers. However, auto stocks would command attention today as the auto sales numbers would start to trickle in.     

The majority of the Asian markets are closed for the New Year holiday. Wall Street bulls bid farewell to 2020 on a buoyant note, aided by strong economic data as jobless claims unexpectedly decelerated. With this, Dow and S&P 500 logged new record closing highs, and the tech-heavy Nasdaq closed with minuscule gains of 0.1 per cent. For the calendar year 2020, the tech-heavy Nasdaq delivered a whopping gain of 43.6 per cent, followed by S&P 500, which delivered 16.3 per cent gains and Dow delivered single digit gain of nearly 7 per cent.  Meanwhile, the European stocks ended on a weak note in the shortened session.