Equities are likely to see gains in the last five trading sessions of this year and the first two sessions of 2026, with broader-market stocks expected to outperform as thinner volumes and year-end portfolio adjustments by institutions.
Historical Win Rates
Data from SAMCO Securities show the so-called Santa Claus Rally has delivered positive returns across equity segments over the past decade, with small-cap stocks emerging as the biggest beneficiaries. Small caps have posted an average return of 3.55% during this period, with a 100% success rate, indicating gains in each of the last 10 years. Midcap stocks have also performed strongly, posting an average return of 2.63% with a high 90% success rate, reflecting participation beyond large-cap names.
Large-cap stocks, represented by the Nifty 100 index, have generated an average return of 1.78% over the same period, pointing to a more defensive but relatively consistent year-end bias.
Jahol Prajapati, research analyst, SAMCO Securities added that downside risk during this period has remained limited, with minimal negative returns even in weaker years. The pattern suggests the Santa Claus Rally is a repeatable seasonal phenomenon rather than a market anomaly, supported by improved sentiment, lighter trading volumes and year-end positioning, particularly benefiting mid-and small-cap stocks. So far in 2025, however, small-and mid-cap stocks have underperformed their larger peers.
Sentiment vs. Fundamentals
The broker said, “While historical data shows a positive market bias during this window, the Santa Claus Rally is generally seen as being driven more by sentiment and liquidity than by underlying fundamentals.”