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Nifty IT, Nifty Auto: 'Sell on rise' strategy apt amid possible downtrend

Nifty IT Index is facing significant resistance around the 35,800 mark. The recent correction in the market has initiated a downtrend in near-term, as per Ravi Nathani

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Ravi Nathani Mumbai

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Nifty IT Index: Resistance Levels and Trading Strategy Analysis

The Nifty IT Index, currently positioned at 35,283, is encountering significant resistance in the near term, notably around the 35,800 mark.

The recent correction in the market has initiated a downtrend for the near term. In light of these observations, the suggested trading strategy for investors is to sell on rallies.

Implementing a sell-on-rise strategy is aligned with the expectation that the index is facing hurdles in surpassing the noted resistance levels.

This approach allows investors to capitalize on potential downward movements in the market. Staying in cash for a period is advised until the index approaches specified support levels.

The first support on the charts is anticipated around 34,450, with a subsequent support level near 33,900. Investors are encouraged to exercise patience and refrain from fresh buying until the index nears or reaches these support levels.

This cautious approach enables investors to make well-informed decisions based on the evolving market conditions. It's crucial for investors to stay vigilant and adapt their strategies in response to dynamic market developments.

Monitoring price movements and staying informed about key support and resistance levels enhances the ability to navigate the market effectively.

In summary, the Nifty IT Index's current scenario suggests a resistance zone around 35800 and a triggered downtrend in the near term.

The recommended strategy for investors is to sell on rallies and remain in cash until the index approaches specified support levels, providing a prudent approach to managing market risks.

Nifty Auto Index: Analysis and Trading Strategy

The Nifty Auto Index, currently at 18,339, is depicting a near-term downtrend on charts. In this scenario, the first support level is anticipated around 17,600, with a subsequent support level near 17,300.

Given this market outlook, the recommended trading strategy is to sell on rallies. Initiating selling positions on upward movements aligns with the identified downtrend, allowing traders to capitalize on potential downward movements in the market.

It's crucial to exercise caution and refrain from making fresh buying positions until a clearer trend reversal or support level is observed.

For risk management, it is advised to place a stoploss above 18725 on a closing basis. This stoploss serves as a protective measure, helping traders mitigate potential losses in the event of unexpected market movements.

To summarize, the current analysis indicates a near-term downtrend in the Nifty Auto Index.

The suggested trading strategy involves selling on rallies, with a cautious approach to initiating fresh positions. The specified stoploss acts as a protective measure, contributing to a risk-aware trading approach.

Disclaimer: Ravi Nathani is an independent technical analyst. 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: Jan 03 2024 | 7:29 AM IST

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