Ravi Nathani recommends wait-and-watch for Nifty IT, cautious on Auto

Nifty IT index remains range-bound, trading between 44,400 on the upper side and 42,800 on the lower side, while, Nifty Auto index is currently exhibiting a bearish trend in the near term

Nifty IT Index: Consolidation signals awaited breakout

The Nifty IT index remains range-bound, trading between 44,400 on the upper side and 42,800 on the lower side. A breakout from this consolidation range will likely set the tone for the next directional move. If the index breaks above 44,400, traders can anticipate further bullish momentum with the next resistance levels at 44,975 and 45,500, signaling potential upside targets. 

 

Conversely, a break below 42,800 could trigger bearish sentiment, with the next support zone identified at 41,950. For safe traders, the recommended strategy is to wait for a confirmed breakout above or below the current range and then align their trades with the direction of the breakout. However, risky traders might consider selling near the upper resistance of 44,400, maintaining a strict stop loss at this level on a closing basis. 

 

The target for this strategy would be the lower range at 42,800. Technical indicators currently reflect a neutral stance, with no significant directional bias. This underlines the importance of closely monitoring the levels of 44,400 and 42,800 for actionable trading signals. In summary, the Nifty IT Index is in a consolidation phase, with a decisive breakout or breakdown likely to dictate its next move. 

 

Safe traders should await clarity, while risky traders may capitalise on the current range-bound setup with cautious stop loss management. The key focus remains on the breakout levels to guide subsequent trading strategies.

 

Nifty Auto index: Downward pressure with limited upside potential

The Nifty Auto index is currently exhibiting a bearish trend in the near term, with further underperformance expected unless the index breaks and closes above the key resistance level of 23,850. This level serves as a critical benchmark for reversing the ongoing weakness. 

 

Until then, the best trading strategy for short-term traders would be to adopt a sell-on-rise approach, with a strict stop-loss placed at the breakout level of 23,850 to manage risks effectively. The index's inability to hold above 23,850 suggests limited bullish momentum, and a breach of the lower support level at 23,450 is likely to intensify selling pressure. 

 

In such a scenario, the next immediate support levels to watch are 23,300, 23,100, and 22,800, where temporary buying interest might emerge. However, sustained pressure below 23,450 could lead to further declines, making this a crucial level for monitoring. Technical indicators align with the bearish outlook, indicating that rallies are opportunities for selling rather than initiating fresh long positions. 

 

Traders should remain cautious and avoid aggressive buying until clear reversal signals appear on the charts. For now, the index is expected to trade under pressure, weighed down by a lack of positive triggers and broader market sentiment. 

 

To summarise, the Nifty Auto index remains in a downward trend, with resistance pegged at 23,850 and significant support levels at 23,300 and lower. The recommendation for traders is to focus on selling near resistance levels while maintaining a close watch on critical support zones for any signs of reversal.