 "IT sector, work from home")
Tech majors had a combined market cap of Rs 15.9 trillion on Friday, up from Rs 14.9 trillion at the beginning of January this year
Nifty IT Index
The Nifty IT Index is currently range-bound between 43,000 and 41,800, indicating a consolidation phase on the charts. A breakout above or below this range will likely trigger a significant move in the index, making it a crucial zone for traders to watch. If the index trades above 43,000, it could trigger a fresh wave of bullish momentum, opening the path for further gains.
This could present an opportunity for traders to enter long positions and ride the upward movement. However, traders should wait for a decisive breakout with strong volume to confirm the bullish trend. On the flip side, if the index trades below 41,800, it could lead to a sharp correction.
A close below this level would invalidate the bullish outlook, potentially leading to a bearish phase. In such a scenario, the next support level is at 41,050, which could act as a downside target for short-term traders. A break below 41,800 is a critical signal that all bullish positions should be reconsidered, as further declines may follow.
The best trading strategy would be to wait for a confirmed breakout or breakdown and then take positions accordingly, with stop losses placed near the range boundaries to manage risk.
Nifty Auto Index
The Nifty Auto Index is currently at a critical juncture, with 25,150 acting as a key support level. This level is the last hope for all bullish positions, meaning that a close below 25,150 could trigger a bearish sentiment in the market.
Traders should closely monitor this level, as any breach could lead to further downside, and the market might see a sell-off in auto stocks. In such a case, it would be wise to exit long positions or tighten stop-losses.
On the other hand, if the index breaks above 25,600, it would signal a fresh upward rally. This breakout would likely bring 25,850 and 26,275 into play as the next resistance levels. A sustained move above 25,600 could be a signal for traders to take fresh long positions, as the index is expected to continue its upward momentum.
In summary, the best trading strategy would be to keep a close eye on 25,150 for any downside risks. If it holds, traders could consider staying in or adding to long positions. If the index breaks 25,600, it could be a signal to enter long positions targeting the resistance levels of 25,850 and 26,275.
(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.)
First Published: Sep 12 2024 | 6:18 AM IST
