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

September seasonality leans bearish, with the Nifty closing decrease in 6 of the final 10 years, largely pushed by overseas capital outflows as FIIs turned web 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 good points and had been web sellers on six events in September, whereas they infused funds on 4 different events. They had been web 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 web patrons 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 web patrons in September yearly. The best shopping for was recorded in 2024, when DIIs bought equities value Rs 31,860 crore. The following strongest shopping for months had been in 2017 and 2014, with DIIs buying shares value 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 sequence 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 value of Indian equities had been offloaded.“FIIs had been unequivocally bearish — web sellers of Rs 38,590 crore in money — and maintained a unfavorable bias in index futures, whereas being marginal patrons in inventory futures. Regardless of the index weak point, 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, SBI Securities noticed that Nifty’s efficiency in September has been blended. On 10 events, the index closed constructive with a median achieve of 6.78%, whereas on 8 events, it ended unfavorable with a median lack of 2.65%. The typical return for the Nifty in September has been 2.6%. Moreover, September has persistently proven a median volatility of 9% for the Nifty index, the report stated.

Based mostly on rollover knowledge from August, potential outperforming sectors might embody vehicles, client 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, based on the report.

Technical view

Presently, the index is buying and selling under its 20-, 50-, and 100-day EMA ranges, and the day by day RSI is under its 9-day common, nearing a slip under the 40 mark, SBI Securities 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 under 24,250 could result in additional correction towards the 24,000 stage,” the brokerage warned.

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