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Definition: Santa Claus Rally
Santa Claus Rally is defined as the phenomenon in the share market which results in steep rise in the indices that happens between Christmas and New Year period i.e. 25th December and January 1. It is also referred to as December Effect.
The most widely recognized hypothesis clarifying this wonder is that individual financial specialists, who are salary charge delicate and who excessively hold little stocks, offer stocks for expense reasons at year end and reinvest after the first of the year. Another reason is the installment of year end rewards in January. Some of this reward cash is utilized to buy stocks, driving up costs.
A Santa Claus rally is simply an ascent in stock costs in the month of December, by and large seen over the last week of exchanging before the new year.
• Traders and investors can make money over it.
• It is just a hypothesis observed and may not be always true.