Nuvama Institutional Equities in its latest note said October has historically favoured Indian equities, with the Nifty delivering an average gain of 0.6 per cent and ending positive in 70 per cent of the past 10 years.
Nifty Bank has been even stronger, averaging 2.6 per cent gains and closing positive in 80 per cent of the years – suggesting potential opportunities this month.
That said, the brokerage noted that heavy HNI derivative positioning, a strong global backdrop with precious metals rallying and US equities at all-time highs, in addition to nearly Rs 35,000 crore of IPO-related liquidity absorption over the next two weeks, could drive extreme volatility in the Indian stock market.
Nuvama said FIIs have turned slightly more cautious by adding index shorts and trimming stock futures longs, while Clients (HNIs and retail) trimmed index longs but showed stronger conviction in stock futures, adding meaningfully to SSF longs.
The brokerage remained cautious, at least in the near term. “On the technical side, immediate Nifty support lies around 24,250, while resistance is seen near 25,250. The divergence in seasonal trends between the Nifty and Nifty Bank could add to volatility, though we expect continued optimism in PSU banks,” it said.
Nuvama said OMCs namely BPCL, HPCL and IOCL stand out as the aces in the pack with long roll aggression. Metals & PSU banks saw higher rollovers than average, likely indicating that the longs remain intact in the sector.
F&O stocks in pharma, information technology and FMCG saw inline rollovers, similar to past months, hinting towards the existence of shorts in the sectors. One can expect negative bias in these sectors to continue unless data points change during the month, Nuvama said.
“Auto Manufacturers- while we saw LR aggression for the sector in July & August rollovers, the positioning had remained unusually high for September and the rollover is slightly lower than avgs on this higher OI base. Expect a bit of a cool-off Gold financiers (Muthoot & Manappuram), along with other NBFC’s have seen ahead of average rollovers this month,” Nuvama said.
September 2025 was a volatile month, with the Nifty 50 initially rallying to 25,440 before giving up gains to close marginally higher at 24,611, up 0.4 per cent. Flows told the story of a stark divergence for the third month in a row: FIIs extended their selling streak with $1.8 billion of outflows, while DIIs more than offset the pressure, pumping in a robust $6.7 billion.