Based on seasonality trends, here's the top three small-cap stocks to watch out for in September!

Here are the top three small-cap stocks to watch out for in the month of September

We have often heard that price never moves in straight lines, neither up nor down. The month of August is the best testimony of this phrase. The month started high on optimism as FIIs continued buying, camp lifted the sentiment, and the bulls went from strength to strength. At one point in time, Nifty reached almost within the striking distance of the 18,000 mark on Nifty. However, as we already know that price never moves in a straight line, the bear woke up after a long sleep amid strength in the US Dollar index and Federal Reserve Chairman Jerome Powell’s statement at Jackson Hole that the interest rates may continue to rise in order to combat inflation. As a result, growth is expected to take a backseat and it seems that inflation remains a hard beast to tame, which paved the way for volatility.   

However, the last trading session of the month of August turned out to be a marvellous one, which helped the benchmark indices to deliver a decent return of 3.5 per cent. Meanwhile, talking about the broader market performance, Nifty Midcap and Smallcap indices outperformed the frontline gauges.   

As we move to begin a brand-new month, there is an interesting observation that we have noticed in the last three years. The month of September has been favourable one for Nifty Smallcap index as it gained 2.7 per cent, 4.2 per cent & 6.1 per cent in 2019, 2020, and 2021, respectively. On the back of this strong data, which suggests that Nifty Smallcap index has the potential to perform well in September, we have hand-picked the top three stocks from Nifty Smallcap index, which should be on your radar based on seasonality analysis.   

Here are the top three Small-Cap stocks to watch out for in the month of September:

City Union Bank: The stock on average delivered gains of 6 per cent with a positivity rate of 80 per cent as out of 20, it ended in green in the month of September on 16 instances. Interestingly, the stock has three times recorded consecutive positive years. Hence, keep a close watch on this stock.   

Carborundum Universal: Historically, the month of September has been fabulous for this stock as out of 20, it managed to deliver positive returns on 15 instances. Moreover, the average gains registered by this stock in September is 8.90 per cent while the cherry on top is that its maximum return for September historically has been an eye-popping 29.80 per cent.    

Welspun India: If history is to be believed, then it is likely that the stock might deliver robust performance in the month of September as it has closed positively 16 out of the 19 times in the past. The stock’s average return in September is 12.29 per cent.