Nifty IT, Nifty Auto signal downtrend on charts: Here's how to trade

Nifty IT Index

The Nifty IT Index, currently trading at 34744.35, is experiencing a downtrend in the near term according to chart analysis. Support levels are anticipated around 34400 and 34250, presenting potential buying opportunities for traders and investors. 

Given this analysis, the recommended strategy for traders and investors is to wait for the correction to complete and consider buying the index and its constituents around the specified support levels.  

This approach allows for capitalizing on potential upward movements in the form of a quick technical bounce. The target for this bounce is expected to be around 35200 and 35500. Additionally, technical indicators such as RSI and MACD are indicating that the market is trading very close to the oversold zone. 

Therefore, buying on dips is advised, as it presents an opportunity to enter the market at potentially favorable price levels. 

Traders and investors should remain vigilant and monitor price movements closely, executing trades based on the specified support levels and technical indicators in the Nifty IT Index.

Nifty Auto Index

The Nifty Auto Index, currently trading at 21146.20, is showing signs of short-term underperformance, as indicated by its overbought condition and negative divergence on technical indicators such as RSI and MACD. 

Given these observations, it is advisable for traders and investors to exercise caution and consider staying away from or booking profits in this sector. The overbought condition suggests that the index may experience a correction or pullback in the near term.  

Support levels on the charts are anticipated around 20650 and 20200. Therefore, traders and investors may opt to book profits at the current market price (CMP) or on any upward movement, with the mentioned support levels serving as potential targets for re-entry or further downside protection. 

By taking proactive measures such as booking profits or staying away from the sector, traders and investors can mitigate risks associated with potential short-term underperformance in the Nifty Auto Index. It is essential to closely monitor market developments and adjust trading strategies accordingly.

Disclaimer: Ravi Nathani is an independent technical analyst and 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.