Stock Market September Outlook: Will Nifty Rise or Fall After August Volatility?

August was a bumpy month for Indian markets. The Nifty moved in a 770-point range, between 24,409 and 25,179.

After an early rally, the index suddenly fell more than 650 points in the last five sessions, finally closing the month with a small 0.88% loss, accoridng to Sudeep Shah, Vice-President & Head of Technical and Derivatives Research, SBI Securities.

Why the Swings?
Mid-month, sentiment improved after S&P Global Ratings upgraded India’s outlook, and Prime Minister Narendra Modi announced next-generation GST reforms by Diwali. These two triggers boosted confidence in growth-focused sectors like automobiles, FMCG, and consumption.

But things changed quickly. In the last week of August, U.S. President Donald Trump imposed a fresh 25% tariff on Indian goods. The move spooked investors, raising fears over India’s export competitiveness and company earnings.

Traders Carry Bets to September
Despite volatility, traders rolled over positions aggressively. Nifty rollover surged to 83.63% in August, above July’s 75.71% and higher than the three-month average of 79.62%. This shows traders are willing to carry their positions into September, even at higher costs.

As per Shah, Bank Nifty told a different story. It fell sharply by 3.44%, under pressure from large private banks, though rollover also climbed to 80.90%.

FIIs Still Bearish
Foreign investors continued to play safe. Their long-short ratio dropped to 8.24%, reflecting heavy short positions. This is the longest stretch in recent history where FIIs have stayed net short. Shah said this shows “a sustained cautious stance of overseas investors amid global uncertainties.”

Key Levels Investors Should Track
According to Shah, the Nifty has strong support at 24,300-24,250. If this level breaks, the index could slide further to 24,000. On the upside, 24,700-24,750 is the resistance zone to watch.

For Bank Nifty, 53,600-53,500 is the crucial support. If broken, the index may test 52,400. Resistance lies near 54,500-54,600.

Winners and Losers in August
Some stocks saw big gains in August. UNOMINDA (+24%), Hero MotoCorp (+21%), Maruti (+18%), TVS Motor (+16.8%) and Paytm (+13%) led the pack.
But there were losers too — PG Electroplast (-33%), PNB Housing (-22%), Suzlon (-15%), and RVNL (-14%) were among the worst performers.

Sectors to Watch in September
Looking at rollover trends, SBI Securities expects Automobiles, Consumer Durables, and FMCG to do well in September. On the other hand, Private Banks, Financial Services, Oil & Gas, Defence, Realty, and Media may continue to stay weak.

What History Says About September
History shows September has been a mixed month for the market. In the past 18 years, Nifty has ended positive 10 times with an average gain of 6.78%, and negative 8 times with an average loss of 2.65%. Average return stands at 2.59%, with volatility around 9%, according to Shah. 
Bank Nifty has done better — it has closed positive 11 times out of 18, with an average gain of 9.77%.

What Investors Should Do Now

Shah summed up: “Investors must stay stock- and sector-specific rather than broad-based, as market breadth remains weak with 67% of single stock futures ending in the red.”

For investors, the message is clear: stay selective and don’t chase the index blindly. Autos and FMCG could offer opportunities, especially with festive demand picking up in September. But weakness in banking and oil-linked stocks means investors should stay cautious.

Disclaimer

The views expressed in this article are purely informational and Republic Media Network does not vouch for, promote or endorse any opinions stated by any third party. Stock market and Mutual Fund investments are subject to market risks and readers are advised to seek expert advice before investing in stocks, derivatives and Mutual Funds

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