 "Stock Market Today: Should you book profit in Nifty IT, Metal indices?")
Nifty IT Index: Profit Booking Recommended as Resistance Approaches
The Nifty IT Index is demonstrating an upward trend in the near-term, with the next significant resistance level identified at 45,550, derived from pivot-level analysis (R4). This level is particularly critical as the index is nearing a new lifetime high, and no historical resistance levels are available to guide further movements.
The sharp rally in recent sessions has pushed the technical indicators, including RSI, MACD, and Stochastic, into overbought zones, signaling the potential for profit booking at these elevated levels. This overbought condition suggests that the index might witness a temporary pause or a pullback in its upward trajectory.
Support levels to watch for a potential pullback are situated at 44,380, 43,725, and 43,200. These levels present favorable entry points for traders and investors looking to re-enter or build positions in the index. The best trading strategy at this juncture is to book profits on the rise and wait for the index to retrace towards its support levels.
Nifty Metal Index: Sell on Rise Strategy Amid Signs of Exhaustion
The Nifty Metal Index exhibited a sharp rally in recent sessions, but the formation of a Doji candle in the previous trading session indicates a potential loss of bullish momentum. This suggests that bulls may be retreating, and caution is warranted for traders holding long positions.
Key levels to watch include the 9,425–9,380 range, which serves as a crucial support zone. A break below this range would likely trigger panic selling, as it represents the stop-loss level for most bullish positions. In such a scenario, the index could decline further, with support levels identified at 9,250, 9,125, and 9,025.
Given these conditions, the best trading strategy for the near-term is to adopt a sell-on-rise approach. Traders are advised to book profits at current market prices (CMP) and avoid initiating fresh long positions until the correction phase concludes. Accumulation near the aforementioned support levels, once the correction stabilises, would provide a more favorable risk-reward setup for re-entering the market.
Technical indicators also align with this cautious stance, reflecting potential overbought conditions and a weakening bullish outlook. Monitoring price action closely, particularly around the 9,425–9,380 range, will be critical in determining the next directional move.
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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.