Nifty poised for recovery, Midcap Select awaiting breakout: Ravi Nathani

The Nifty index has witnessed a sharp correction, positioning it firmly in the oversold zone, Nifty Midcap Select index is currently exhibiting range-bound behaviour

Nifty index: Oversold zone indicates rebound potential

The Nifty index has witnessed a sharp correction, positioning it firmly in the oversold zone as per key technical indicators like RSI, MACD, and Moving Averages. This condition suggests that the index is primed for a technical bounce, especially in the absence of adverse global developments. 

 

This week, coinciding with the monthly derivative expiry could mark a turning point, with the broader trend expected to shift toward bullish momentum. The index finds critical support at 23,250, 23,000, and 22,800, levels that are likely to arrest further declines. 

 

On the upside, resistance levels are placed at 23,950, 24,400, and 24,800, which could serve as immediate targets during the anticipated recovery. The RSI indicates oversold conditions, favouring a rebound, while MACD is showing signs of bearish momentum waning. 

 

The Moving Averages further support this view, suggesting that the correction phase may have bottomed out. The recommended trading strategy is buying on dips, with a strict stop-loss at 23,200 on a closing basis to safeguard against any unexpected downturns. 

 

The bullish sentiment could gain traction, supported by short-term recovery trends and improving market sentiment. Traders should closely monitor resistance levels as potential profit-booking zones while keeping an eye on global cues that could influence market dynamics. Overall, the index appears poised for a recovery, offering a favourable risk-reward opportunity for traders aiming to capitalise on the near-term bounce. 

 

A disciplined approach with clear stop loss and profit targets is essential for navigating this volatile phase.

 

Nifty Midcap Select index: Awaiting a breakout for clear direction

The Nifty Midcap Select index is currently exhibiting range-bound behaviour, oscillating between 12,325 on the upper side and 12,025 on the lower side. This consolidation phase indicates that the market is awaiting a clear trigger to establish a definitive trend. 

 

Until a breakout above or below this range occurs, traders are advised to approach cautiously. For now, the best trading strategy for conservative traders would be to wait for a decisive breakout before entering positions, as this would provide clarity on the direction of the next move. 

 

For risk-tolerant traders, there is an opportunity to capitalise on this range by buying near the support at 12,025 and selling near the resistance at 12,325, maintaining a strict stop loss at the breakout levels to manage risk. Should the index break above the 12,325 level, the next resistance levels are expected at 12,425, 12,500, and 12,725, offering upward targets for bullish trades. 

 

Conversely, if the index breaches the lower boundary at 12,025, the subsequent support levels are 11,925 and 11,800, suggesting further downside potential. Indicators such as RSI and MACD remain neutral, aligning with the current consolidation phase. 

 

This scenario emphasises the importance of patience for traders, as the next significant movement is likely to be triggered by a breakout. 

 

In conclusion, while the index remains range-bound, both breakout and range-based strategies can be employed, but with caution and a disciplined risk management approach.  (Ravi Nathani is an independent technical analyst. Views expressed are personal.)