Market analysts expect volatility to rise on either side of the market in September based on the F&O and historical market data.

The Nifty 50 index started the September derivatives series on a shaky note, down 2.3 per cent or 548 points as of Wednesday’s low at 23,787. As of 10:45 AM, the index quoted 0.8 per cent or 194 points lower at 23,861.

 

In the past five trading sessions of the September series the Nifty declined 1.1 per cent or 280 points. Amid this, foreign institutional investors (FIIs) were net sellers of index futures worth ₹5,968.16 crore.

 

Data from NSE shows that FIIs net sold 37,900 contracts of Nifty futures during this period; thereby taking the total short bets in index futures from 2.08 lakh contracts at the end of August expiry (August 25) to 2.47 lakh contracts as of September 1. According to analyst the recent FII selling is clearly a fresh bearish signal for the market.

 

“FIIs have been net sellers of futures every session since the Sep series opened, and Nifty tracked down, from 24,334 on August 25 to 24,055 on September 1. This is a live bearish signal, not a stale one, the shorting is continuing into the new series rather than tapering,” says Dharmesh Bhatt, Head-Derivatives Research at Systematix Institutional Research.

 

An analysis of the index long and short positions shows that FIIs long-short ratio in index futures stands at 1:10. This ratio suggests that FIIs hold 10 short (sell side) bets in index futures for every long (buy side) position.

Bhatt says that a persistently skewed short book is a standing overhang, every rally into resistance tends to attract fresh shorts rather than short-covering, capping upside.

 

The analyst, however, cautions that the short bets does not suggest an imminent crash, but yes the bias remains negative.

 

“FIIs’ long-short data doesn’t mean crash risk on its own, but combined with the net selling in the last five days, the near-term bias skews down,” explains Bhatt.

 

Nifty daily chart

 

Going ahead, the analyst expects Nifty to seek support around 23,700 levels; whereas on the upside he expects resistance around the September series open at 24,333, followed by the August high of 24,775.

 

Meanwhile, on the technical charts, the Nifty is seen quoting below its long-term 200-day moving average (200-DMA) since the breakdown on February 27, 2026.

 

Meanwhile, Raj Gaikar, Equity Research Analyst at SAMCO Securities says that the Nifty seems gearing up for a bigger move in the next 1-3 month period following a prolonged consolidation in August.

 

Gaikar analysed data of the last 320 calendar months starting January 2020 (around 26 years), in which Nifty moved in less than 1 per cent trading band consistently for 21 or more trading sessions in a month, which included August 2026.

 

According to Gaikar’s findings, there were only eight such instances during this long period, following which the Nifty one-month forward return averaged 1.2 per cent, with the Nifty ending higher in five of the eight instances.

 

Adding that the three-month picture was considerably more striking: returns ranged from -29.34 per cent to +12.06 per cent, with six of the eight instances witnessing a move of more than 5 per cent in either direction.

 

“The message is therefore less about direction and more about magnitude. Historically, periods of extreme calm have not necessarily indicated whether the next major move would be upward or downward, but they have often preceded a meaningful increase in market movement,” says Gaikar.

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not sharechart. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.

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