Minor pullback in Nifty IT; range-bound movement in Nifty Auto likely

The optimal trading strategy for risk-tolerant traders involves selling Nifty IT either at the current levels or on upward movements, suggests Ravi Nathani

Nifty IT Index: Balancing Risk and Reward in an Uptrend

The current market price for the Nifty IT Index is 32,479.15, and the near-term trend is upward. Despite the prevailing bullish sentiment, a minor pullback is anticipated.

Implementing a strict stop loss at 32,900 on a closing basis, the optimal trading strategy for risk-tolerant traders involves selling either at the current market price or on upward movements.

The target or support levels are expected at 31,975, 31,700 and 31,425. For traders who prefer a more conservative approach, it is advisable to wait for a slight correction within the uptrend.

The recommended strategy for safe traders is to purchase the index and its constituents near the above-mentioned support levels. This patient approach allows for entry at more favorable prices, aligning with the overall upward trend in the Nifty IT Index.

By tailoring their strategies to their risk tolerance, traders can navigate the market effectively, capitalizing on potential upward movements while managing risks associated with short-term corrections.

Nifty Auto Index: Navigating Consolidation with a Bearish Bias

The current market price for the Nifty Auto Index is 17,792.10 and the short-term trend is bullish on charts. However, in the near term, the index is consolidating, indicating a range-bound movement.

The consolidation phase suggests that while the index experienced a sharp rally in the short term, it is now undergoing a consolidation with a negative bias.

For traders, the recommended strategy is to sell on upward movements or at the current market price, implementing a strict stop loss if the index closes above 17,900.

The consolidation range is expected to be between 17,900 and 17,700. A decisive close above or below this range would serve as a trigger, determining the potential direction of the market.

Given the prevailing overbought conditions indicated by technical indicators like RSI and Stochastic, there's a higher likelihood of the index breaking lower. Support on charts is anticipated around 17,100 and 16,850.

Hence, the most prudent trading approach for near-term traders is to sell on upward movements or book profits at the current market price.

This strategy aligns with the observed consolidation pattern and negative bias, allowing traders to navigate the market effectively and manage risks associated with the ongoing consolidation.

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.