Nifty 50 Index
The Nifty 50 Index is currently experiencing a downward trend in the near term, as seen on the charts. Despite this short-term decline, the overall trend remains bullish. This situation presents an opportunity for investors to buy near support levels, making it essential to wait for the current correction to complete before accumulating the index and its constituents. Support levels for the near term are expected between 24,400 and 24,300.
If the index closes below this range, it would open the window for the next support levels at 24,075 and 24,000. A further break below these levels would lead to a strong support at 23,500 and 23,100, which could be considered oversold levels. The best trading strategy would be to buy only near these support levels rather than short selling, as the overall short-term trend remains bullish on the charts.
Risky traders could consider short selling with a stop loss of 24,850 on a closing basis, targeting the aforementioned support levels. However, a more prudent approach would be to avoid short selling and wait for the correction to complete near the specified support levels before starting to buy the index and its constituents.
By following this strategy, traders and investors can take advantage of the bullish overall trend while minimizing risks associated with the current downward correction. It is crucial to monitor these support levels closely and be prepared to accumulate positions when the index approaches these areas, ensuring a favorable risk-reward ratio for future gains.
Nifty Midcap Index
The Nifty Midcap Index is currently trending downward in the near term, as indicated by recent chart patterns. Given this trend, the best trading strategy for traders and investors would be to focus on buying the index when it reaches key support levels. Support for the Nifty Midcap Index is expected at 12,450 and 12,150.
These levels represent potential entry points for those looking to take advantage of the eventual reversal and continuation of the overall bullish trend that midcap stocks often display over longer periods. By buying near these support levels, traders can position themselves to benefit from the anticipated rebound once the index stabilizes and resumes its upward trajectory.
This strategy minimizes risk by avoiding purchases at higher, less stable price points and allows for the potential to capitalise on the index’s recovery. Monitoring the Nifty Midcap Index closely as it approaches these support levels is crucial.
Traders should be ready to enter positions as the index nears 12,450 and 12,150, ensuring they can take advantage of the more favorable risk-reward ratio offered at these lower levels. This cautious yet strategic approach aligns with the overall market behavior and maximizes the potential for gains as the index corrects itself from the current downward trend.
(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: Aug 05 2024 | 6:27 AM IST
