Nifty IT, Auto indices present divergent trading opportunites, show charts

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Nifty IT Index


The Nifty IT Index, currently trading at 35,047.40, is showing signs of a potential small technical bounce in the near term. However, traders should be mindful of the resistance levels anticipated on the charts, which are expected around 35,780 and 36,664.


Given this outlook, the optimal trading strategy for traders would be to consider buying the index on dips. This strategy entails purchasing the index when its price experiences temporary declines or pullbacks.


However, it is crucial to implement a strict stop-loss strategy to manage risks effectively. In this case, a recommended stop-loss level would be 34,650 on a closing basis. If the index were to close below the stop-loss level of 34,650, it may indicate a reversal in sentiment and potentially trigger further downward movement.


In such a scenario, the next support levels on the charts are projected to be around 34,000 and 33,200. These levels could serve as potential areas of price stabilization and may attract buying interest from traders looking for value opportunities.


By adhering to the strategy of buying on dips with a disciplined stop-loss approach, traders can navigate market fluctuations with greater confidence and mitigate potential losses.


Additionally, staying informed about key support and resistance levels can aid traders in making well-informed trading decisions based on technical analysis and market dynamics.


Nifty Auto Index


The Nifty Auto Index, currently trading at 21,555.35, is facing stiff resistance on the charts, anticipated around the 21,850 level. In light of this resistance, the recommended trading strategy for both the index and its constituents would be to book profits and transition to a cash position.


Swing traders may also consider initiating short sell positions, with a stop-loss set at 21,850 on a closing basis. The target support levels for such a strategy are expected around 21,000 and 20,564.


Adhering to a strategy of selling on rallies or at the current market price (CMP) is advisable for the near term. This approach aligns with the prevailing market conditions and technical signals, optimizing the potential for profit-taking opportunities.


Additionally, staying vigilant and responsive to price movements can help traders effectively manage risks and capitalize on market fluctuations.


(Ravi Nathani is an independent technical analyst. Views expressed are personal).




 

First Published: Apr 04 2024 | 6:25 AM IST



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