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Navigating Near-Term Trends: Insights for Nifty IT and Auto Indices
Nifty IT Index
In the world of technology, the Nifty IT Index is currently experiencing a bullish trend on charts, with resistance expected at 38,380 and 39,036. While the near-term outlook remains positive, caution is advised due to technical indicators signaling proximity to an overbought zone.
The RSI, standing at 69 on daily charts, and the Stochastic at 77 underscore this cautious sentiment. Given these indicators, the optimal trading strategy for traders is to consider booking profits on the upward rally and holding cash in the short term.
A prudent approach involves waiting for a potential pullback, with support anticipated around 36,900 and 36,475, providing strategic re-entry points into the market.
Nifty Auto Index
The Nifty Auto Index reflects a bullish trend in the near term, marked by a robust rally over the past fortnight. However, a note of caution is sounded as the next resistance on charts is projected at 20,450.
Technical indicators, particularly the Stochastic at 91.40 and RSI at 78, suggest that the index might be entering an overbought territory. In light of these indicators, traders are advised to consider booking profits on the rise or near the resistance levels.
As a tactical move, staying in cash for the near and short term is recommended. The subsequent buying opportunity may arise on a pullback near the support levels of 18,900 and 18,400, aligning with a more favorable risk-reward ratio.
In conclusion, both the Nifty IT and Auto Indices present lucrative opportunities with their respective bullish trends. However, the cautioned approach advocated here emphasizes the importance of profit booking at resistance levels and maintaining liquidity in the short term.
By aligning trading strategies with potential pullback scenarios and identified support levels, investors can navigate these markets with a calculated and strategic approach.
(Ravi Nathani is an independent technical analyst. Views expressed are personal).
