Nifty sees worst September series in 25 years. What does October hold?

Nifty closed out its worst September derivatives series in 25 years as relentless selling dragged the index below a key long-term support zone last tested during the Covid crash. The benchmark was down 6.7% during the said period, a fall last seen in September 2001, when the index recorded a decline of 6.5%.

The September series has been brutal for Dalal Street. Nifty lost more than 1,400 points during the series, while foreign selling, elevated crude prices, a weak rupee and hardening bond yields kept risk appetite under pressure.

The fall has also pushed the index into its longest weekly losing run since 2020. Monday’s sharp slide had already pulled Nifty to a six-month low, and on Tuesday, the index breached a key moving average level of 22,600.


Rupak De, Senior Technical Analyst at LKP Securities, said the index has slipped to its 200-week moving average as the decline extended.

"This is the first time since the Covid crash that Nifty has fallen to the 200-week moving average, which is currently placed at 22,600," De said. "A decisive break below this level could trigger a sharper correction in the market."

He said 22,600 will remain a crucial level. If Nifty manages to move back above it, a recovery towards higher levels can still be expected. On the upside, he sees immediate resistance at 22,800.

Osho Krishan, Chief Manager - Technical & Derivative Research at Angel One, also advised caution given the established downtrend.

"Any intraday dips towards key support levels can be considered for selective long positions, while chasing upward momentum should be avoided for now," Krishan said.

He said immediate resistance for Nifty is likely in the 22,800-22,900 band, followed by a stronger hurdle at 23,000-23,100. On the downside, the 22,550-22,500 zone, marked by the current session’s low, is the first support area. A stronger cushion is seen in the 22,400-22,500 band.

One of the key reasons for the sharp fall this month is brent crude, which stayed elevated around $105 a barrel after moving near $108, increasing concerns over India’s import bill, inflation and the rupee. The rupee has been trading near two-month lows around 96.2 to the dollar.

Bond yields have also added to the pressure. India’s 10-year government bond yield rose to 7.17%, its highest level since April 2024, while the US 10-year Treasury yield remained above 5%. Higher global yields usually reduce the valuation comfort for emerging-market equities and make foreign flows more sensitive.

Siddhartha Khemka, Head of Research, Wealth Management at Motilal Oswal, said Indian equities are likely to consolidate after the recent fall. "After a 6.8% correction, valuations have moved into far more reasonable territory, and the downside from current levels should be limited,” Khemka said.

He said domestic activity remains a support, with August IIP rising 8% year-on-year and consumer durables pointing to a recovery in urban discretionary demand. Resilient GDP growth is also helping cushion the impact of global stress.

Krishan said traders and investors should maintain light positions, avoid aggressive bets and wait for sustained price strength and improving market breadth before turning constructive.