Sell Nifty IT on the rise; resistance at 38,350, check other details here

Nifty IT Index Analysis

The Nifty IT Index is currently trading at 37,314.35. In the near term, the index appears to be range-bound, with the defined range between 37,525 and 37,050. A close above or below these levels would trigger a directional move. Given the sharp rally seen last month, the index is positioned at a critical juncture.

For risk-taking traders, the best strategy would be to sell on rises or at the current market price (CMP). For safer trading, it is advisable to wait for a breakout from the established range. If the index breaks below 37,050, the next support levels to watch would be 35,625 and 34,750. Conversely, if the index closes above 37,525, the subsequent resistance levels would be 38,000 and 38,350.

The rationale for the sell-on-rise strategy is supported by the overbought nature of the index following the recent rally, suggesting potential profit booking. Technical indicators such as RSI and MACD might also show signs of weakening momentum, further reinforcing the likelihood of a pullback.

 

In summary:

Risk-Takers: Sell on rises or at CMP, with the stop-loss set above 37,525. Target support levels are 37,050, 35,625, and 34,750.

Safe Traders: Wait for a clear breakout. If the index breaks below 37,050, look for opportunities to sell, targeting the support levels. If it breaks above 37,525, look for buying opportunities, targeting the resistance levels of 38,000 and 38,350.

This dual approach caters to different risk appetites while aligning with the technical signals and market conditions, allowing traders to make informed decisions based on their risk tolerance and market behavior expectations.

Nifty Auto Index Analysis

The Nifty Auto Index is currently trading at 25,182.80. In the near term, the index appears to be range-bound, with a defined range between 25,500 and 24,875.

A close above or below these levels would likely trigger a directional move. If the index closes above 25,500, the next resistance levels on the charts would be 25,800 and 25,990. This upward move would indicate a bullish breakout, suggesting further upward momentum and opportunities for traders to enter long positions. Conversely, if the index closes below 24,875, the next support levels would be 24,475 and 24,000.

This downward move would indicate a bearish breakout, suggesting a potential decline and opportunities for traders to enter short positions. Given the current range-bound nature of the index, the best trading strategy would be to wait for a clear breakout above 25,500 or below 24,875. This approach helps avoid premature entries and aligns trades with the confirmed market direction.

For traders willing to take on more risk, positions could be initiated within the range with tight stop-losses. For example, short positions could be taken near the upper end of the range (25,500) with a stop-loss just above this level, and long positions near the lower end of the range (24,875) with a stop-loss just below this level. This strategy allows traders to capitalize on the breakout direction once it occurs, thereby reducing the risk of false signals and enhancing the probability of successful trades.

In summary, the Nifty Auto Index is at a pivotal point where a breakout from the current range of 25,500 to 24,875 will dictate the next significant move. Until such a breakout occurs, the prudent approach is to remain patient and wait for a clear directional signal. For those seeking to trade within the range, strict stop-losses and careful monitoring are essential to manage risks effectively.

(Disclaimer: Ravi Nathani is an independent technical analyst. Views are his own. He does not hold any positions in the Indices mentioned above and this is not an offer or solicitation for the purchase or sale of any security. It should not be construed as a recommendation to purchase or sell such securities.)