Ravi Nathani recommends sell-on-rise strategy for Nifty IT, Auto indices

Nifty IT Index: Bearish Outlook with Sell-on-Rise Strategy

 

The Nifty IT Index is exhibiting a clear bearish trend in the near term, prompting traders to adopt a cautious stance. The best trading strategy under the current technical setup is to sell on rise, with a strict stop loss at a closing level above 44,800. This approach ensures disciplined risk management while capitalising on the ongoing downtrend. Key support levels have been identified at 43,675, 43,425, and 43,050. These levels are crucial as the correction is likely to stabilise around them. Traders should monitor price action near these supports closely, as they may offer a potential opportunity for reversal or consolidation. Until the index demonstrates strength at these levels, bullish positions should be avoided. The MACD indicator, a reliable tool for gauging momentum, is on the verge of turning bearish. This further reinforces the likelihood of continued underperformance in the near term. A bearish crossover on the histogram would confirm the negative momentum, signaling additional downside risks. In light of these technical signals, traders are advised to await the completion of the correction near the identified support levels before considering any long positions. For now, the sell-on-rise strategy remains the most prudent approach to navigate this bearish phase. By aligning trading strategies with the prevailing trend and utilising well-defined stop losses, traders can effectively manage risks while optimising returns. This technical setup calls for patience and vigilance as the Nifty IT Index navigates its current corrective phase.

 

Nifty Auto Index: Bearish Momentum with Sell-on-Rise Strategy

 

The Nifty Auto Index is currently exhibiting a bearish trend following a negative breakdown on the charts, as confirmed by yesterday’s close. This breakdown signals a continuation of downward momentum in the near term. Traders should adopt a cautious approach, aligning their strategies with the prevailing downtrend. Key support levels are identified at 22,050 and 21,450, where the index may find temporary stability. However, given the current technical indicators, the likelihood of further downside remains strong. The MACD indicator is in negative territory, reflecting weakening momentum. Additionally, the RSI and Stochastic oscillators confirm bearish sentiment, with both suggesting oversupply conditions and the absence of immediate buying interest. Under these conditions, the most effective trading strategy is to sell on rise while maintaining a strict stop loss at 23,050 on a closing basis. This level serves as a critical resistance point, and any breach above it could invalidate the bearish outlook. Traders are advised to monitor price action closely, particularly around the identified support levels. While these levels could provide temporary relief, the overall technical setup favors a continuation of the downtrend in the near term. Patience and discipline will be key, as selling opportunities on minor pullbacks can help traders capitalise on the bearish momentum while managing risk effectively. In summary, the Nifty Auto Index is firmly in a downtrend, and the sell-on-rise strategy remains the most prudent approach amidst the current technical landscape.

 

(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.)