Nifty IT faces bearish trend on charts; should you sell? Analyst answers

Nifty IT Index

The Nifty IT Index is currently showing an upward trend on the charts, with the index nearing its weekly resistance levels for this week, which are expected to be between 39,925 and 40,000. Given the proximity to these resistance levels, the best trading strategy for near-term traders would be to book profits around these levels. The market is likely to encounter resistance, and booking profits before a potential pullback can help safeguard gains.

For those looking to re-enter the market, fresh investments should be made on pullbacks to support levels. The key support levels to watch are 39,480 and 39,025. These levels provide a safer entry point for both near-term and short-term traders and investors. The overall trend remains bullish, but caution is advised as the index approaches significant resistance. It is important to wait for a pullback to the aforementioned support levels before making new investments or adding to existing positions.

Nifty Auto Index

The Nifty Auto Index is currently trending downwards on the charts. The expected downside targets for the index are 24,800 and 24,400. Given the bearish trend, the best trading strategy would be to sell on any rise, maintaining a strict stop-loss if the index closes above 25,400. This stop-loss level is critical to managing risk, as a close above 25,400 could invalidate the bearish outlook and potentially signal a trend reversal.

Traders should be prepared for the possibility of further declines in the index, and selling on rallies is advisable to capitalize on the downtrend. The bearish sentiment is reinforced by the technical indicators, which suggest that the index is likely to face continued selling pressure in the near term. Investors and traders should be cautious and adhere to the stop-loss level to protect against potential upward breakouts.

In summary, the Nifty IT Index is poised near resistance, making it an opportune time to book profits and wait for a pullback before re-entering. Conversely, the Nifty Auto Index is in a downtrend, with a strategy focused on selling into rallies while observing a strict stop-loss. Both indices require careful monitoring of key levels to execute trades effectively in the current market environment.

(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.)