Charts suggest Nifty 50, IT Index may enter consolidation phase

Technical analyst Ravi Nathani expects the NSE benchmark index to consolidate in 17,150 - 17,850 range

Nifty 50 Index

Last close: 17,599.15

The Nifty 50 Index, which is currently trading at a CMP (Current Market Price) of 17,599.15, has experienced a sharp rally of nearly 800 points in the past 10 trading sessions.

As a result, the Index has approached a near-term resistance level at 17,625, which is expected to trigger fresh buying if surpassed. The next resistance level is projected to be around 17,864.

Based on the analysis of the Index's previous swing high, it is anticipated that the Index may undergo consolidation in the coming days with either a time-wise or price-wise correction.

This implies that the Index may experience flat and consolidation days with a negative bias. Therefore, traders should consider selling near resistance levels and buying near support levels as the most viable trading strategy.

The broader range of consolidation for the Index is projected to be between 17,850 and 17,150. It is important to note that even if traders miss the opportunity to sell near the resistance level, they need not worry as the short-term trend is upward. Hence, it is preferable to buy on dips rather than sell on the rise, considering the current market scenario.

Nifty IT Index

Last close: 28,764.55

The Nifty IT Index, currently trading at a CMP (Current Market Price) of 28,764.55, is anticipated to undergo consolidation in the near term according to technical analysis. The expected consolidation range for the Index is projected to be between 29,200 and 27,650.

A trade above or below this range would serve as a trigger for the direction of the Index's movement. Currently, the Index is trading close to the pivot levels for the month. In the near term, if the Index slips below 28,500, it is highly likely to find support around 27,650, which is near the S1 (Support 1) on the monthly basis.

On the flip side, if the Index surpasses 29,200, the next resistance level is expected to be around 30,000. Another technical indicator, the MACD (Moving Average Convergence Divergence), is trading in positive territory, indicating that any corrections from the current levels may result in divergence and attract short-term opportunity traders.

Based on the chart patterns and the overall structure of daily charts, it is advisable for traders in the near term to consider selling on the rise for a small correction. On the other hand, investors may find opportunities to accumulate the Index and its constituents at lower levels for a potential rally upwards expected in the mid-term.

In conclusion, the Nifty IT Index is expected to undergo consolidation in the near term, with potential trading opportunities for short-term traders and investment opportunities for investors in the mid-term.

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