Thanks to the Foreign Institutional Investors (FIIs) who turned out to be buyers in the Indian Stock Market (according to the Moneycontrol Data) for the month that has just ended. On the other hand, Domestic Investors (DIIs) has sold a minimal amount in August 2022.

The other factors that help the Nifty Index to continue its rally are –

• Good monsoon across the country,
• Stable Crude Oil prices,
• Steps taken by the Reserve Bank of India (RBI) to control Inflation,
• Various steps taken by the Indian Government on the Economic front,
• Better economic condition of the country as compared to other nations,

The Way Forward – September 2022

Since the new month (September 2022) has just started, index and option traders would love to know where the Nifty ends at the end of the month; will it end in green yet again or red?

To answer this question again, let’s go through the historical data.

If we study the last ten years’ data, from 2012 to 2021 (in particular the September month) history reveals 50:50 outcomes, where the bulls charged five times and the bears charged five times.

In fact, in these ten years, there were four instances where the Nifty has given more than 2.5% of positive returns (2.8% in 2021, 4.1% in 2019, 6.1% in 2013, and 8.5% in 2012) and only two instances where it fell 2% or more (6.4% in 2018 and 2% in the year 2016).

If we stretch our study further and take last twenty years of data, from 2002 to 2021, history suggests that there have been at least 12 instances where the Nifty index closed in green and as many as 8 instances it closed in the red.

In this period of twenty years, there was 10 times where the Nifty index rose more than 4% (12.5% in 2007, 11.6% in 2010, 9.1% in 2005, 9% in 2009, and 8.5% in the year 2012) whereas it fell 10.1% in the year 2008.

Taking the study forward and keeping last 28 years of the September month history into account, the benchmark index has generated more than 2.5% of positive returns 13 times and 7 times negative 2.5% returns.

Now What –

On August 31, 2022, the reserve Bank of India has presented GDP data, where India’s “Gross Domestic Production” recorded a growth of 13.5% during April to June period. The growth was lower than the RBI’s and economists expectation (15% growth was estimated) but far better than other developed and developing countries.

On September 1, the Finance Ministry has presented GST data, where the country collected INR 1.44 Lakh Cr as “Goods and Services Tax” in August 2022, registering an increase of 28% as compared to a year back (4% lower than July 2022 collection).

The USD/INR equation is a cause of concern for the time now.

Investors and traders’ nerves would be tested for sure as we will witness a huge volatility in this month.

We have the Federal Open Market Committee (FOMC) meeting in the second half of the month followed by the RBI Monetary Policy Committee meeting and other some events.

On the technical front, the Nifty has touched a high of 17992 on 19 August 2022 close to its long-term average of 18000.

Currently it is trading well above its short-term and long-term moving averages,

The RSI is above 60 which confirm the strength in the current momentum.

In a nutshell, if history is to go by (also keeping technical set-up in mind) chances of the NSE benchmark index delivering a positive return is likely in September 2022.

Let’s see how it works out.

#Happy Investing

Disclaimer: The contents and data presented here are just for your information & personal use only. While much effort is made to provide the information, I (Vishal Dalwadi) or “FinBlab” do not guarantee the accuracy, correctness, completeness or reliability of any information or data displayed herein and shall not be held responsible.

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