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Is it time to sell Nifty50, MidCap select index? What analysts say

The Nifty 50 Index is currently trading at 22,952.00 and has rallied significantly in the near term, bringing it close to a stiff resistance zone around 23,050

Nifty 50
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Ravi Nathani Mumbai

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Nifty 50 Index

The Nifty 50 Index is currently trading at 22,952.00 and has rallied significantly in the near term, bringing it close to a stiff resistance zone around 23,050. If the index manages to trade above this level, it may encounter profit booking as it reaches a new lifetime high. Beyond 23,050, further resistance levels are expected at 23,125, 23,200, and 23,300. 

Conversely, if the index breaks below 22,900 on a closing basis, it will likely find support at 22,750, 22,575, and 22,450. Given the current placement of the index on near-term charts, the best trading strategy would be to book profits either at the current market price (CMP) or on any rise. Alternatively, traders should consider selling if the index trades below 22,900, targeting the mentioned support levels. 

For those who have booked profits at CMP or on a rise, it would be prudent to wait for the index to reach the specified support levels before accumulating the index and its constituents on dips. 

The overall trend remains bullish and the index is expected to outperform in the longer term. Therefore, the net trading strategy involves selling at CMP or on a rise and then buying near the support levels for smart and quick returns. 

This approach allows traders to capitalise on the current market conditions while preparing for potential dips that present buying opportunities in line with the bullish trend.

Nifty Midcap Select Index

The Nifty Midcap Select Index is currently trading at 11,444.30. Given the overbought conditions indicated by technical indicators such as Stochastic and RSI, a period of underperformance could be expected. 

Therefore, the best trading strategy would be to sell the index and its constituents on any rise or at the current market price (CMP), with a strict stop loss set at 11,550. Support levels on the charts are anticipated at 11,325, 11,200, and 11,100. 

Traders and swing traders should avoid rushing to buy this index, as it may correct further. The optimal buying opportunities are expected at the support levels of 11,000, 10,850, and 10,780. These levels would present the best chances for traders and swing traders to accumulate and build bullish positions for near-term gains. 

In summary, the strategy involves selling on rises or at CMP while waiting for the index to reach the lower support levels to make bullish entries. This approach leverages the current overbought conditions to capture potential profits from the anticipated correction and positions traders to benefit from subsequent rebounds at strong support levels.

(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.)

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First Published: May 27 2024 | 6:35 AM IST

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