Broad-Based Rally Lifts Nifty, Bank Nifty SEBI Analysts Point To Seasonal Weakness In September

Indian equity markets are trading firmly in the green, buoyed by optimism from the strong Q1 GDP data. 

The Nifty index is up 100 points, holding above 24,500, while the Nifty Bank index has gained 127 points. The standout performer is the Nifty Midcap index, which surged 1.1%, reflecting broad-based strength in the mid-cap space. 

Sectorally, the Nifty FMCG and Nifty Media indices are the only ones trading in the red, while the others witness healthy gains.

SEBI-registered analyst Akhilesh Jat highlighted that the key drivers of Monday's rally include strong Q1 GDP growth, positive sentiment following a US court ruling that Trump-era tariffs are illegal, and optimism surrounding PM Modi's participation in the SCO Summit in China.

September Outlook

SEBI-registered investment advisor True North Capital shared insights based on statistics for the Nifty index in September, spanning the years 2000 to 2024.

The mean monthly return for September is 1.23%, while the median return is higher at 2.10%, indicating that outliers have contributed to the lower average. The standard deviation is notably high at 6.79%, indicating high month-to-month variability in returns. 

The minimum and maximum returns recorded during this period are -13.1% and 12.6%. Additionally, 54.2% of September months have closed with positive returns. 

True North stated that investors should expect lower returns and higher volatility in September, and that it is advisable to size positions conservatively and avoid using leverage based solely on observed seasonal patterns. 

They added that one must use a 'buy-the-dip' approach only with confirmation on market breadth, volatility, and flows. Historically, significant positive outliers were more frequent between 2007 and 2013. In recent years, however, the movements have been relatively contained compared to earlier cycles, hinting at moderated tail risk, although the average price moves remain relatively small.

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