We had a decent August, and now September is going to bring us a new wave of returns, hopefully. But that’s exactly the topic today: are bears going to take charge in September? What has been the historical performance in terms of seasonality? How have the last 20-30 Septembers done? Is there a seasonality factor? Here, we take a data-backed look at “come September.” So let’s get on with what happened on the first day of September.

Market Overview

Markets—new day, new high—another new high, 25,303, became the new all-time high today and closed at 25,278. But the market is very iffy. It just is crawling upwards. There’s no strong move upwards. And while I’m not going to complain about the market going upwards, it almost seems as if there is tiredness and lethargy, and it’s just because more funds are coming into the market and hence fund managers are having to deploy those funds, and hence stocks are having to go up. I mean, otherwise, there was no intent to go up. So that is the kind of undercurrent feeling that one is getting. But of course, there are no complaints if markets are going up.

Nifty Next 50

Broader markets: Nifty Junior absolutely flat, although made a new all-time high

Nifty Mid and Small Cap

Nifty Midcaps. Almost, I would say, opened at a new all-time high, closed -0.29%, so still not able to clear the previous high with any force. Small caps also down 0.07%, just about hanging there at the top.

Usually, when stocks are unable to go higher than what they have achieved, a sudden move upwards is usually not possible. That is the general sort of thing you’ll see. It’ll spend some time consolidating, maybe some time consolidation is happening, and then some trigger may lead it up. So without a trigger, I doubt this market can really go up in the short term, but triggers can always be around. Triggers may be the rate cut that is expected in the middle of the month. So a few days to go for that. So I think next week probably is going to be the run-up to the rate cut, if at all. And then let’s see whether it’s a sell on news or markets really get excited about it.

Nifty Bank Overview

Nifty Bank up from yesterday by 0.17%, but again, just a very lethargic up move.

Momentum Trends

Within the momentum trends, pretty even, slightly biased towards the decline, so 218 versus 281 on the CNX 500.

FII and DII Trends

I would say the shorters are having a slightly upper hand. FIIs in the last two sessions did quite well, but that was also because of the MSCI inflows. So many stocks have got fresh inflows due to the MSCI re-jig of the index weights. And correspondingly, DIIs had a nice sell on the 30th. Let’s see where today’s numbers are.

Nifty Heatmap

In the heat map, you had Bajaj Finserv, Bajaj Finance again doing very well. This is in anticipation of the Bajaj Home Loan Company issue that is coming through. So I suppose they are holding some stake, and that is why the excitement is there. Axis Bank also up, IndusInd Bank, SBI Life—all this entire segment was up. SBI was also up 0.8%, HDFC Bank as usual down and sluggish 0.6%, HCL Tech doing very well at +3%, other IT stocks did not do well, so HCL Tech really standing out. Bajaj Auto again up 2%, you had Hero Motors doing very well at 2%, ITC almost 1.6%. These were some of the top real gainers today, along with UltraTech Cement. Adani stocks in limelight today: Adani Green and Adani Power both up 6%, Adani Enterprises 2.6%, so it seems that Adani is getting its act together again for some acquisitions that were there in the news. Jio Financial doing very well at +7%, Bajaj Holdings up +6%, ICICI General Insurance also up 2% along with SBI Life. Notable losers were Zomato, Torrent Pharma, ABB, Siemens, GAIL, and Vedanta.

Sectoral Overview

Sectoral trends: nothing much to really talk about, but pharma and metals lost some steam today. Metals 1% down, along with pharma and FMCG stocks gained 0.8%. But other than that, I really don’t think there was anything material in any move upwards. PSU banks gained some ground today, so on a weekly basis, now they are back and they are reducing their losses for the last one month. In the last one month, IT and pharma are the only two sort of sectors that have done 5% or more.

Sectors of the Day

Nifty FMCG Index

FMCG stocks: ITC, Varun Beverages, Britannia, United Spirits, Radico—these were the stocks running up. FMCG stocks are near their all-time highs, which is always a good sign.

Stocks of the Day

Gujarat Gas

In terms of stock spotlight, you had Gujarat Gas do very well, up 12%, and Gujarat Gas holdings, I think, are in GSPC also, so that stock also was doing well. On a very long-term basis, Gujarat Gas has come out of this consolidation and is likely to challenge its previous high.

Story of the Day : Will bears win in September?

That is the question. Just to make things very clear, I don’t know the answer, but let’s go look at the data and try to derive some inference if we can. So since the last 33 years, this has been the distribution of September returns. Now, there have been blocks of gaining years and sporadic down years—one really bad year in September 2001 at -13%, another one in 2008 at -10%, another one in September 2000 at nearly -9%, and a couple of 6% down periods also. But other than that, largely flat or up, the average return is 1.58%. So we really can’t make out if there’s any seasonality if we look at the last 34-year data, but the probability of a positive month is certainly much higher than that of a negative month, if that gives us any solace that we are likely to have a positive month.

In the last ten years, however, the situation has been different versus 34 years of data. Average September returns have been slightly negative. Worst case scenario has been -6%, biggest best scenario has been +4%. 40% is the positive month, 60% is the negative month. So you can really say there’s a good chance that this may be a higher probability of a slightly negative month that is coming up. If we see one-year, three-year, and five-year annualized returns from September historically, then you can see that significant positive CAGR is achievable if you start here. If you’ve not started so far, even if you start here, you should be able to get decent CAGR going over three to five years. But then there are years when even from the current period, your three-year CAGR could be -12%. That is a worst-case scenario. Actually, in the last so many years, in the one-year period, as I already mentioned, 28%, 21% could have been the sort of look forward one-year returns from September.

So I’m just laying down the data so that one can assess what has happened in the past. September and October, I would say, both are leading to the festive season, so there is some sort of buildup towards that season where the real results come out post the festivities. Many times I’ve seen that September and October, especially global events—maybe not so many, but at least the GFC crisis and in the dot-com crisis also, September-October were not such great months. Somehow these months are slow, and then if you compare them with November, December, January, which are much better months on a seasonality basis, that is somehow how the history has played out.

FIIs have been positive in September for the last ten years on four occasions. Right now, most months are negative for FIIs. Domestic institutions, of course, have been on the positive side for most of the period. So Nifty’s performance in September over the last ten years reveals trends that are skewed in favor of the bears slightly. However, overall cues are quite decent at the start of the month. We were at a new high at the start of September, August also, and we are now at a new high at the start of September also. How this month will go around is a bit of a guess. The long-term performance, as I mentioned, three to five years have been healthy. DIIs have played a role in stabilizing markets—net contributors in the last nine consecutive Septembers. September 2023 had maximum outflows, yet the market was supported by DIIs. Nifty went up 2% there, so the flow of funds doesn’t seem to be stopping. The SIPs are going on very well.

The fact that we have a presidential election in the US just a couple of months away, I think, should play a good role in terms of keeping markets hopeful for a good outcome. I’m not sure what is a good outcome, but the markets are usually very hopeful unless there is a stark difference between the polls that are running right now and also this mid-month interest rate cut, which a lot of folks are saying could be a half a percent cut in the US can somewhat shift flows towards emerging markets, towards precious metals from developed markets as their interest rates come down and as institutional money starts to take more risk on that might come in.

So I’m not seeing a case where one should be bearish in this market. It’s very difficult to sell into a market that is hitting new highs. So every sell attempt is likely to lead to the short covering, and that is what we have been seeing. So I would be very cautious in trying to go short at any stage right now, at least until we get some sign that the market has started to slow down.

Let’s go to our winners of the day. Jio Financial Services: 7% up. Again, post-relisting, this stock had gone down from 300-odd to 220. From 220 now it’s back to 240. There are anticipations of where this stock is going to go and how this stock is going to perform. Now, I think the whole business that is being talked about is that this will become a great lending business, not a non-lending business. Bajaj Holdings: 6% up. Gujarat Gas: 12% up on high gas prices. GSPC: 10% up on high gas prices, so these are our top gainers for the day. And Adani stocks also came back into focus. I hope this was a helpful Daily Bite. Keep your seat belts fastened because it’s going to be a great ride, and I’ll see you in the next one.

Mi EverGreen’s Subscription Fee goes up on 10 Sep 2024

Effective 10 Sept 2024 , Mi EverGreen’s subscription fee will be increased for the first time since launch.

Old Pricing : Rs 2,499 (Quarterly) | Rs 7,499 (Annual)
New Pricing : Rs 4,999 (Quarterly) | Rs 14,999 (Annual)

For Current Subscribers of Mi Evergreen

Nothing changes for current subscribers at all. You shall continue to enjoy access to the strategy at your current subscription fee as long as you do not break your subscription loop. Kindly ensure that you keep your auto renew ON and renew your subscription on time.

For those who haven’t subscribed yet

This is a great opportunity to subscribe to Mi Evergreen at its current pricing. Use the link given below to subscribe