6 F&O stocks that could move in September: What history says about their direction

The seasonality data for September throws up three bullish candidates – PGEL, Mazagon Dock and TVS Motor and three bearish candidates – BDL, HDFC AMC and NAM India. And the technical charts are making a pretty strong case for these 6 stocks.

What is Seasonality Analysis?

Seasonality analysis is the study of the past behaviour of a stock during a certain period of the calendar.

For September, we analyse how the stock has performed in September over the years, calculate its average return and percentage of positive years and find patterns of recurrence.

Before we head to the detailed analysis of the stocks mentioned here, let us look at the seasonality analysis.

Bullish Stocks

Bearish Stocks

3 F&O Bullish Stocks

1. PG Electroplast – Bullish Breakout of the Falling Channel

PG Electroplast (PGEL) has given a good average performance of 14.25% in September. September has closed on a positive note in 64.29% of the years in the data provided.

The historical figures are especially interesting, with PGEL producing several strong September rallies, including 75.37% in 2020, 42.17% in 2012, and 32.87% in 2013. The historical trend is certainly positive, but past performance is not indicative of future results.

Technically, PGEL is breaking out to the upside from a falling channel. A falling channel generally suggests a period of corrective price action, with the stock carving out lower highs and lower lows within parallel lines.

A close above the upper boundary means the corrective phase could be out of control. So, the combo is interesting with positive seasonality and a falling channel breakout.

With an average return of +14.25%, and a percentage of positive years is 64.29%, the probability of the stock performing seems high.

2. Mazagon Dock – Higher High Suggests Dow Theory Reversal

Of the three bullish candidates, Mazagon Dock has one of the best seasonal patterns. The average return of the stock in September is 11.26% and 80% of the observations were positive in September in the data provided. Thus, the stock tends to have a relatively consistent positive bias during the month.

The technical structure provides yet another important dimension. Mazagon Dock appears to be in the midst of a Dow Theory type bullish reversal as the price attempts to make a higher high after a long string of lower highs.

This shift in market structure is important. In a downtrend, sellers usually prevail by making lower highs again and again. When price finally breaks that sequence and makes a higher high this is the first sign that the balance between buyers and sellers may be changing.

If the stock moves to a higher high and then to a higher low, the setup becomes even more compelling, creating the classic sequence of:

Lower High > Breakout > Higher High > Higher Low would show more evidence that the larger corrective structure is moving into an uptrend.

Mazagon Dock has an 80% historical positive ratio for the month of September, and it is worth watching for an extension of probable bullish momentum.

3. TVS Motor – Bullish breakout of horizontal trendline

The most consistent bullish seasonal candidate in the data set provided is TVS Motor. The stock has averaged an 8.97% return in September, but the bigger story is the 93% positive ratio. Thus, TVS Motor has been positive in September in almost every year that is there in the analysis.

The technical structure where the stock is breaking out over a horizontal trendline on the bullish side is also constructive.

Horizontal resistance zone is the area where sellers have appeared many times in the past. When price finally breaks above that level it can be an indication that the supply sitting around that zone has been taken.

The best bullish case would be a move above the breakout level that holds, ideally with strong participation. TVS Motor is arguably the most statistically consistent bullish setup among the six stocks with +8.97% average September return, 93% positive years and a horizontal resistance breakout.

3 Bearish F&O Stocks to Watch for September

1. Bharat Dynamics – Lower High Structure

Bharat Dynamics (BDL) presents a very different picture of seasonality. The stock has averaged a September return of -5.72%, with only 37.5% of the years positive. September has traditionally been a weak month for BDL.

The technical structure lends support to this bearish bias. BDL is showing a lower high structure which is one of the easiest ways of identifying weakening momentum under Dow Theory.

Each failed attempt to break the previous swing high shows that buyers are not able to regain control. The sequence of lower highs suggests rallies remain vulnerable to selling pressure.

So, for September traders should look for BDL to stall out near old swing highs and then probably break key support levels.

2. HDFC AMC – Reversal From Multiple Resistance

HDFC AMC also has negative bias in September month seasonally. The stock’s average September return is -4.72%, with just 37.5% of the years ending up in the data provided.

Technically, the stock is reversing from a multi-resistance zone. The level becomes significant as the price approaches a resistance zone that has been rejected multiple times. A new rejection from a zone like this can tell you that sellers are still defending the area.

The setup becomes more probable bearish if the reversal is followed by a break of the immediate swing low or short-term support.

3. Nippon Life Asset Management India – Fake-Out & Rising Trendline Breakdown

Nippon Life Asset Management (NAM India) rounds out the bearish list with an average return of -4.06% for September and a positive-year ratio of just 37.5%.

The technical setup is quite interesting as the stock has had a fakeout and then breakdown of the rising trendline.

A fake out is when price moves outside of an important level for a period of time making traders think a breakout is on the way only to reverse. This failed breakout becomes more important when it is followed by a breakdown of a previously established rising trendline.

This combination can be a sign that bullish momentum has waned and that the previous bullish structure is at risk.

Conclusion

September’s seasonality data distinctly distinguishes the two groups. Positive historical September performance combined with constructive technical structures for PGEL, Mazagon Dock and TVS Motor BDL, HDFC AMC and NAM India, in contrast, combine negative seasonal tendencies with weakening price structures.

Among the bullish stocks, TVS Motor has the strongest seasonal consistency with 93% positive years, and PGEL has the strongest average historical return of 14.25%. On the downside, the weakest average September performance is BDL with -5.72%.

But seasonality is a filter, not a trigger. Historical monthly patterns differ by market regime, and even a strong seasonal tendency can fall apart in a single year. Seasonality by itself does not mean a forecasting tool, but research has shown that stock returns have recurring calendar month effects, with evidence from individual stocks.

Disclaimer:

Note: The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.

Brijesh Bhatia is an Independent Research Analyst and is engaged in offering research and recommendation services with SEBI RA Number – INH000022075. He has two decades of experience in India’s financial markets as a trader and technical analyst.

Disclosure: The writer and his dependents do not hold the stocks discussed here.

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