Ravi Nathani decodes trading strategy for Nifty IT, auto; Check key levels

The Nifty IT Index is exhibiting a bullish trend on the charts, while Nifty Auto is indicating that any decisive move above or below 24,250 and 23,250 levels could signal a new trend direction

Nifty IT analysis: Bullish outlook with key resistance and support levels

The Nifty IT Index is exhibiting a bullish trend on the charts, with upward momentum suggesting the potential for gains in the near term. Current resistance levels are positioned at 42,710, followed by 43,375 and 43,575. As the index approaches these levels, traders may consider booking profits, given that these resistance points could serve as short-term hurdles. 

 

On the downside, the support levels are marked at 41,800 and 41,400, which are also advisable as strict stop-loss points for those holding bullish positions. A close below 41,400 could indicate a reversal, opening the door for potential downside, with additional support anticipated at 40,725 and 39,550. This lower threshold would signal the possibility of deeper corrections, emphasising the importance of monitoring these support levels closely. 

 

 

In summary, the Nifty IT Index appears favorable for buy-on-dips strategies, with a positive bias for near-term traders. Key resistance points present opportunities for profit-taking, while maintaining a disciplined stop-loss strategy around the identified support levels can help manage risk effectively.

Nifty Auto analysis: Range-bound strategy with the potential for a technical bounce

The Nifty Auto Index is currently range-bound between 24,250 and 23,250, indicating that any decisive move above or below these levels could signal a new trend direction. Until such a breakout occurs, the best strategy for traders is to adopt a buy-near-support and sell-near-resistance approach, capitalising on the expected price oscillations within this range. For more cautious traders, waiting for a confirmed breakout on either side before initiating a position would be prudent.  Should the index break below the 23,250 level, the next significant supports are expected at 22,425 and 21,325, levels where additional buying interest might emerge. On the other hand, if the index breaches the upper range at 24,250, it could potentially rally to resistance points at 24,600, followed by 25,700 and 26,700, providing traders with key profit-taking levels. 

 

Technical indicators such as the RSI have been relatively flat following a recent correction, suggesting the potential for a technical rebound in the near term. This pattern indicates a buying opportunity on dips as market sentiment could favor an upward bounce. For those trading within this range, setting a strict stop-loss around the lower level or just below 23,250 is advised to manage downside risk. In summary, the Nifty Auto Index presents a promising opportunity for range-bound trading, with the potential for a technical bounce on the horizon. 

 

Traders should remain alert to the support and resistance levels while monitoring for any breakout signals to capitalise on shifts in momentum.  (Ravi Nathani is an independent technical analyst. Views expressed are personal.)