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Illustration: Ajay Mohanty
Nifty50
The Nifty50 Index is currently showcasing a bullish trend on the charts, indicating strong upward momentum in the near-term. This positive outlook suggests that the index is poised to move higher, with potential gains on the horizon for traders and investors. If the Nifty 50 manages to break and close above the critical level of 24,950, it could pave the way for the index to achieve a new lifetime high. The subsequent target levels following this breakout are 25,080, 25,375, and 25,800.
Given the bullish momentum, the best trading strategy for near-term traders would be to capitalise on dips or lower levels to buy the index and its constituents. This approach allows traders to take advantage of the current uptrend while positioning themselves for the anticipated upward movement towards the aforementioned target levels. The presence of both lagging and leading indicators highlighting outperformance further strengthens the case for a bullish outlook.
These indicators suggest that the Nifty50 Index is likely to continue its upward trajectory, making buying on dips a favourable strategy. By doing so, traders can align their positions with the overall market sentiment, increasing the probability of successful trades.
In conclusion, the Nifty50 Index is set for further gains, with a breakout above 24,950 acting as a key trigger for a potential rally to new highs. Traders should look to buy on dips, aiming for the target levels of 25,080, 25,375, and 25,800, while staying aligned with the bullish trend currently evident on the charts.
Nifty MidCap Select Index
The Nifty MidCap Select Index has recently closed at a new high, indicating strong bullish momentum in the market. This upward movement signals a positive outlook for the index and suggests that there is still room for further gains. However, as the index is currently trading at lifetime highs, there is a possibility of profit booking emerging around certain key resistance levels. These resistance levels are anticipated to be around 13,200 and 13,500, which are psychologically significant round figures that could prompt traders to lock in profits.
At these high levels, some volatility is expected, and profit booking may be a prudent strategy for near-term traders. Utilising a Systematic Withdrawal Plan (SWP) approach is advisable for those invested in this index and its constituents. This method allows traders to regularly take profits, thereby managing exposure and maintaining a balanced approach in the face of market volatility.
As the index approaches the resistance levels of 13,200 and 13,500, technical indicators are likely to enter the overbought zone. This could serve as a warning sign that the index may be due for a pullback or consolidation. Therefore, traders should keep a close watch on the index’s performance around these resistance levels. Booking profits at these levels would be a wise strategy to mitigate risk and take advantage of the gains already achieved.
In summary, the Nifty MidCap Select Index’s new high signals a bullish trend, but caution is warranted as it nears the resistance levels of 13,200 and 13,500. Near-term traders should adopt an SWP approach to regularly book profits, thereby navigating the anticipated volatility and maintaining a favourable risk-reward balance. Keeping a vigilant eye on technical indicators and being prepared to book profits at the aforementioned levels will be key to effectively managing trades in this index.
(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 26 2024 | 6:35 AM IST
