Buy on dips advised for Nifty50 as index moves into this key tech formation

Don't want to miss the best from Business Standard?

Nifty 50 Index: Buy on Dips as 'Bottom Formation' Expected

The Nifty 50 Index appears to be approaching a bottom formation in the near term, signaling that a further downside move seems unlikely. The critical support level is positioned at 24,566, which is expected to act as a strong floor for the index. This level should be viewed as a pivotal point, and traders can consider buying on dips with a strict stop-loss placed at 24,566 on a closing basis.

In terms of resistance, the index is likely to face some short-term resistance around 25,225. A close above this level could trigger a wave of bullish momentum, with the next resistances placed at 25,425, 25,625, and 29,925.

Traders should focus on accumulating positions in the index and its heavyweight stocks at dips, as a bounce from the support level may lead to significant gains. This strategy is well-suited for both short-term and medium-term traders who seek to capitalize on potential upward moves.

Nifty Midcap Select Index: Range Bound with Buy on Dips Strategy

The Nifty Midcap Select Index is expected to trade within a range-bound scenario in the near term, offering opportunities to trade within predefined support and resistance levels. The immediate support on the charts is at 12,800, making this a key level for traders.

If this level holds, a buy on dips strategy should be adopted with resistance targets at 13,125, 13,200, 13,300, and 13,450. However, traders must keep a close watch on the 12,800 level, as a breach of this support could lead to further downside, with the next supports coming in at 12,675, 12,600, 12,525, and 12,375.

In case of a break below 12,800, traders should reassess and prepare for lower levels. This range-bound behavior suggests that near-term traders should actively monitor these support and resistance levels, adjusting their trading strategies accordingly. A strict stop-loss at 12,800 will help mitigate risk in case the index breaks lower.

Conclusion

Both the Nifty 50 and Nifty Midcap Select indices are poised at critical junctures, with potential upside from key support levels. Traders should adopt a buy on dips strategy, keeping tight stop-losses to protect against downside risk.

While the Nifty 50 is expected to form a bottom, the Midcap Select Index could remain range-bound, offering short-term trading opportunities. Focus on these support and resistance levels to execute trades 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.)