 "Nifty Auto in overbought zone; Bullish trend for Pharma index may weaken")
Nifty Pharma Index
The Nifty Pharma Index is currently trading at 13,936.70. The short-term trend is bullish, but there is a significant resistance level at 14,150. If the index surpasses this level, it could trigger more buying. Until that happens, it's a good idea to take profits on any upward moves or hold onto bullish positions with a stop loss at 13,700. This level is important as it could indicate a trend reversal if the index closes below it. The next support levels would then be around 13,600 and 13,400. The caution is reinforced by the Relative Strength Index (RSI), which shows a pattern of lower highs and lower lows on the near-term charts. This suggests that the bullish momentum may be weakening. It's wise to be cautious and closely monitor the price action.
Nifty MNC Index
The Nifty MNC Index is currently trading at 22,018.65. On the daily charts, there is a strong negative divergence observed on the Relative Strength Index (RSI) for the near term. It is advisable to book profits at the current market price or at every rise until the index reaches around 22,200. This is because there is a stiff resistance expected in the range of 22,200 to 22,250. To manage risk, it is important to set a strict stoploss when the index trades below 21,700. If the index breaks this level, it may indicate a downward movement, and the next support levels on the charts are expected to be at 21,100 and 20,400. Considering these factors, it would be wise to sell on any rise in the near and short term. This strategy allows traders to capitalize on potential downward movements and manage risk effectively.
Nifty Auto Index
The Nifty Auto Index is currently trading at 15,614.90. The overall trend is bullish, indicating a positive outlook. However, the recent short-term rally has pushed the index into an overbought zone, suggesting a potential correction. On the charts, there is a strong resistance level expected around 16,136. Breaking this level may prove challenging in the near term. Considering these factors, it is advisable to book profits on the rise and hold cash or maintain bullish positions with a strict stop loss of 15,375 on a closing basis. This stop-loss level acts as a protective measure to manage potential downside risks.
Disclaimer: Ravi Nathani is an independent technical analyst. Views expressed are personal. He doesn't hold any positions in the indices mentioned above and this is not an offer or solicitation for the purchase or sale of any security.