Stock Market Today: How to trade Nifty IT index post Accenture results?

Stock Market Today: The Nifty IT Index is facing mixed sentiments post the recent Accenture earnings, which might uplift IT stocks temporarily. However, a closer look at the charts suggests caution

Nifty Auto Index: Awaiting Range Breakout for Directional Trade

The Nifty Auto Index is currently consolidating within a range of 24,000 to 22,900 on the weekly charts, following a sharp correction in the short term. This consolidation phase suggests indecision in the market, and until the index breaches either of these levels, a clear trend is unlikely to emerge. Safe traders are advised to remain on the sidelines and wait for a decisive breakout above 24,000 or below 22,900 before initiating new positions.

 

For risky traders, the strategy could involve buying near the lower range of 22,900 and selling near the upper range of 24,000, with a strict stop-loss at the breakout points. Since the current market price (CMP) is hovering close to the lower end of the range, those compelled to trade in this index or its constituents can consider accumulating positions at the CMP or on dips, with a weekly closing stop-loss at either 22,900, 22,650, or 22,250, depending on their risk tolerance.

 

A break below 22,900 would likely trigger further downside momentum, with the next strong supports emerging at 22,650 and 22,250. Conversely, a break above 24,000 would indicate bullish momentum, with next resistance levels at 24,700 and 25,275.

Nifty IT Index: Sell on Rise Amid Correction Phase

The Nifty IT Index is facing mixed sentiments post the recent Accenture earnings, which might uplift IT stocks temporarily. However, a closer look at the charts suggests caution. The Relative Strength Index (RSI) and Stochastic Oscillator are both in the overbought zone, signaling that the current bounce may not sustain. This indicates a sell-on-rise strategy for traders and investors, especially near the key resistance levels of 45,350, 45,500, and 45,600.

 

On the weekly charts, the trend remains bearish, with the index in a correction phase. A weekly close below 44,700 would confirm further negative momentum, opening the way for a decline toward the next support levels at 43,875 and 43,200. Until the index completes its correction, initiating fresh long positions may carry higher risks.

 

For short-term traders, my recommendation is to focus on short-selling near resistance levels while booking profits at CMP or on rise. Long-term investors and conservative traders should exercise patience and consider accumulating positions only near the strong support levels mentioned above.

 

In summary, while sentiment around IT stocks may temporarily improve, the technical setup points to a continued correction. The best strategy is to sell on rises near resistance, stay away from aggressive buying, and wait for the index to approach support levels for a safer entry point. 

 

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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.