Trading strategy ahead of Samvat 2081: Buy the dips, Sell the rallies

Financials, IT, Energy and Auto sectors account for over 52% weightage on the Nifty 50 index; here's how the Bank Nifty, IT, Energy and Auto indices are placed on the charts, and likely trend ahead.

The NSE Nifty 50 index has declined 6.5 per cent from its all-time high of 26,277, touched on September 27, 2024, in less than a month. In the process, the NSE Nifty 50 index is now seen testing support around its 100-DMA (Daily Moving Average) - a key moving average the index has held since mid-November 2023, barring the huge single-day fall on June 04 owing to Lok Sabha election related uncertainty. 

Incidentally, the Nifty 50 index had conquered its 100-DMA, just a couple of trading sessions post the Muhurat trading session of Samvat 2080. The 100-DMA, then, stood at 19,575 levels. Post which, the Nifty 50 had rallied over 34 per cent to register its summit thus far.

 

We are now less than a fortnight away from Samvat 2081; will Nifty be able to sustain above this key moving average or will the index end the present Samvat below the 100-DMA?

Here's a trading strategy ahead of Samvat 2081, based on the present chart structure of Nifty and the four key sectoral indices. The Bank Nifty, Nifty IT, Nifty Energy and Nifty Auto indices account for 52.7 per cent weightage on the NSE benchmark index. Thus, these four sectoral indices hold the key for the likely trend ahead.

Nifty

Current Level: 24,700

Upside Potential: 2.6%

Downside Risk: 6.9%

Support: 24,650; 24,505; 24,400

Resistance: 24,900; 25,100

The NSE Nifty 50 hit an intra-day low of 24,568, and was within striking distance of its 100-DMA, which stands at 24,506. Similarly, the Nifty is seen testing support around its 20-WMA (Weekly Moving Average) which stands at 24,650 levels. 

Further, the weekly chart shows presence of a key support in the form of the super trend line at 24,400 levels. The Nifty had broken above its weekly super trend line in May 2023; and since then surged as much as 42.3 per cent. 

Thus to conclude, the near-term bias for Nifty is likely to remain cautiously optimistic as long as the Nifty holds above these key support levels. Break and sustained trade below the same could signal a significant change in trend. Post which, the Nifty can slide all-the-way to 23,000 levels.

Having said that, the Nifty has been trading below its short-term moving averages since the start of the month. Among the key momentum oscillators - the MACD (Moving Average Convergence-Divergence) is in favour of the bears on the daily and weekly charts. The RSI and Stochastic Slow are also negative; but in an oversold zone on the daily scale. Hence, a pull-back or a sideways trend in the near-term seems likely.

In case of a pullback, the upside for the Nifty seems capped around 25,350 levels; with interim resistance likely around 24,900 and 25,100 levels. CLICK HERE FOR THE CHART

Bank Nifty

Current Level: 51,550

Upside Potential: 1.6%

Downside Risk: 5.2%

Support: 51,400; 50,085

Resistance: 52,350

The Bank Nifty has been languishing around its 100-DMA (51,400) for the last two weeks. On the weekly scale, the index seems to be seeking support around its super trend line which stands at 50,085. 

In case this support is violated the index may test its 200-DMA support at 49,320 levels or extend the fall towards the 50-WMA at 48,800 levels.

For now, the upside for Bank Nifty seems capped around 53,100 levels, with interim resistance seen at 52,350. CLICK HERE FOR THE CHART

Nifty IT

Current Level: 42,171

Upside Potential: 8%

Downside Risk: 1.6%

Support: 41,945

Resistance: 42,850

The Nifty IT index seems to be favourable placed on the charts. The index has thus far managed to sustain above its super trend line support, which stands at 41,490; above which near support for the index exists at 41,945. On the upside, the Nifty IT index needs to break above 42,850 levels for fresh momentum. 

The Nifty IT index can potentially surge to 45,550 levels; with interim resistance expected around 43,600 levels, shows the long-term chart. CLICK HERE FOR THE CHART

Nifty Energy

Current Level: 41,000

Upside Potential: 4.3%

Downside Risk: 4.6%

Support: 40,315

Resistance: 42,250; 42.400

The Nifty Energy index is at a crucial juncture, seen testing support at its long-term moving average, the 200-DMA, which stands at 40,315. The index had given a breakout above its 200-DMA on July 03, 2023. Thereafter, the index soared as much as 80.6 per cent to hit a high of 44,721 on September 30, 2024. 

The momentum seems to have turned in favour of the bears for now; with the upside likely to be capped at 42,770 levels. Interim resistance for the Nifty Energy index can be expected around 42,250 and 42,400 levels. On the downside, a key support for the index stands at 39,120 - which may be tested soon. CLICK HERE FOR THE CHART

Nifty Auto

Current Level: 25,170

Upside Potential: 5.1%

Downside Risk: 8%

Support: 24,160

Resistance: 25,565; 25,970

The Nifty Auto index is seen quoting below its 100-DMA for the second straight trading session; the 100-DMA stands at 25,565. The daily chart suggests that sustained trade below 25,100 levels could invite fresh trouble for the index.

On the downside, the Nifty Auto index seems on course to test the 200-DMA support at 23,150 levels. Interim support for the index can be expected around 24,160 levels. 

In case of a pullback, the Nifty Auto index is likely to face resistance around 25,970 and 26,450 levels, shows the daily chart. CLICK HERE FOR THE CHART