The Nifty 50 registered its worst performance, as the index’s September series was its worst September monthly performance in the last 25 years, dragged down by a surge in crude oil prices, higher bond yields, and persistent selling by overseas investors.
The index finished its monthly series with a drop of 6.3%, marking the worst September series since 2001, when it dropped 13.53%.
September proved difficult across most sectors. Pharma was the only sector to finish the series with gains, while auto, realty, and PSU banking stocks were the worst performers during the period. Small-cap and mid-cap indices also snapped a five-series winning run.
The weakness was further reflected in the Nifty 50’s weekly performance, as the index posted losses for seven straight weeks through last week. This marked the index’s longest sustained decline since 2020 and highlighted the deterioration in market sentiment. More notably, the Nifty has recorded seven-week losing streaks only four times in the last 25 years.
Barring 2020, the index logged a seven-week decline in 2008 and twice in 2021. In the same year, it also registered one of its longest losing streaks after falling for nine consecutive weeks.
Financials added to market jitters amid concerns that proposed insurance commission caps could hurt earnings. This came as an additional headwind for the market at a time when sentiment was already weak amid surging crude oil prices.
Crude oil prices have been a focal point for markets since late February, when the US and Israel launched joint strikes on Iran, triggering a war in the Middle East.
Adding to concerns, elevated oil prices have put pressure on global bonds, pushing yields to multi-decade highs and raising fears of further monetary tightening. This has pressured domestic technology stocks, while limited AI exposure has also weighed on the sector.
Meanwhile, with recent rate hikes by the US Federal Reserve, Bank of Japan, European Central Bank, and Bank of Australia, concerns mounted that the RBI could take tightening measures at its October meeting, as inflation remained above the central bank’s target range.
Nifty hits 200-week moving average for first time since Covid crash: What Next?
Rupak De, senior technical analyst at LKP Securities, said the index 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 that a decisive break below this level could trigger a sharper correction in the market. However, Rupak believes that if Nifty manages to hold above 22,600, a similar recovery towards the higher end could be expected. Therefore, 22,600 will remain a crucial support level for Nifty. On the higher end, immediate resistance is placed at 22,800.
Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, said from a technical perspective, the Nifty tested the 22,600–22,580 region, near its 200-week SMA, before recovering, suggesting that the long-term support zone attracted some buying interest. This could support a mean-reversion bounce but does not by itself signal a trend reversal. The index would first need to reclaim 22,800 and subsequently move above the 23,000–23,100 zone to strengthen the near-term structure.
Radhakrishnan said a decisive break below 22,580, however, could expose the index to 22,400. Bank Nifty remains below its 100-week SMA near 55,175, and its inability to reclaim this level could continue to constrain any broader recovery in the Nifty.
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