September seasonality favours bears: Nifty down 6 of final 10 years; the place to speculate now?

September seasonality leans bearish, with the Nifty closing decrease in 6 of the final 10 years, largely pushed by international capital outflows as FIIs turned internet sellers on as many events.

The 50-stock index settled decrease in 2015, 2016, 2017, 2018, 2020, and 2022. The sharpest fall of 6.4% was recorded in 2018, adopted by a 3.7% decline in 2022. In 2016, Nifty fell almost 2%, whereas 2015 noticed a modest 0.3% lower. In 2019, 2021, 2023, and 2024, Nifty closed constructive, rising by 4%, 2.8%, 2%, and a couple of.3%, respectively.

FII/DII knowledge

FIIs booked positive aspects and had been internet sellers on six events in September, whereas they infused funds on 4 different events. They had been internet sellers in 2015 (-Rs 6,475.15 crore), 2017 (-Rs 11,392.27 crore), 2018 (-Rs 10,824.7 crore), 2020 (-Rs 7,782.53 crore), 2022 (-Rs 7,623.66 crore), and 2023 (-Rs 14,767.5 crore). In the meantime, FIIs had been internet consumers in 2016 (Rs 10,443.25 crore), 2019 (Rs 7,547.89 crore), 2021 (Rs 13,153.69 crore), and 2024 (Rs 57,723.64 crore).
However the FII sentiment, home institutional traders (DIIs) have been internet consumers in September yearly. The very best shopping for was recorded in 2024, when DIIs bought equities price Rs 31,860 crore. The subsequent strongest shopping for months had been in 2017 and 2014, with DIIs buying shares price Rs 21,026 crore and Rs 14,220 crore, respectively. In 2018 and 2019, DIIs purchased shares valued at almost Rs 12,500 crore every (2019: Rs 12,490.81 crore).

The September collection began on Friday, August 29, with the Nifty closing 0.3% decrease at 24,426.85. The Nifty index fell 1.7% throughout August amid heightened FII promoting, as Rs 34,993 crore price of Indian equities had been offloaded.“FIIs had been unequivocally bearish — internet sellers of Rs 38,590 crore in money — and maintained a adverse bias in index futures, whereas being marginal consumers in inventory futures. Regardless of the index weak spot, India VIX hovered close to 52-week lows, underscoring complacency or lack of aggressive draw back hedging,” Sure Securities famous.Taking an 18-year view, Sudeep Shah – Vice President and Head of Technical and Spinoff Analysis Desk at SBI Securities noticed that Nifty’s efficiency in September has been combined. On 10 events, the index closed constructive with a mean achieve of 6.78%, whereas on 8 events, it ended adverse with a mean lack of 2.65%. The common return for the Nifty in September has been 2.6%. Moreover, September has persistently proven a mean volatility of 9% for the Nifty index, Shah stated.

Based mostly on rollover knowledge from August, potential outperforming sectors might embrace vehicles, shopper durables, and FMCG. Potential underperforming sectors are prone to be non-public banks, monetary providers, protection, oil & gasoline, media, PSE, CPSE, capital markets, and realty, the VP stated.

Technical view

At present, the index is buying and selling beneath its 20-, 50-, and 100-day EMA ranges, and the day by day RSI is beneath its 9-day common, nearing a slip beneath the 40 mark, SBI Securities analyst famous. “Going forward, the 200-day EMA zone of 24,300–24,250 will act as an vital assist for the index. Any sustainable transfer beneath 24,250 might result in additional correction towards the 24,000 stage,” he warned.

(Disclaimer: Suggestions, strategies, views and opinions given by the consultants are their very own. These don’t signify the views of The Financial Instances)