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Nifty Energy Index: Bullish trend with expected profit booking
The Nifty Energy Index is currently in a bullish trend but has reached a critical resistance level of 44,325 in the near term. As the index approaches this level, traders should consider booking profits and unwinding long positions. Any further rise from this resistance point is expected to see gains. For those looking to re-enter, a pullback is expected, with support levels on the charts at 43,800, 43,600 and 43,200. The best trading strategy would be to take profits at the current market price (CMP) and wait for a pullback to these support levels before taking new long positions. This approach will allow traders to enter the market at more favorable levels after the profit booking phase ends.
Nifty Pharma Index: Range bound with a sell option
The Nifty Pharma Index remains range-bound and is trading between 23,450 and 22,925. A close above or below these levels would act as a directional trigger, which could lead to a bullish or bearish breakout. Until such a breakout occurs, the best strategy is to wait for clearer signals. For risk-tolerant traders, buying near the 22,925 support level and selling near the 23,450 resistance level is a viable approach, with a strict stop-loss at the breakout levels. However, several technical indicators point to the index being overbought, increasing the likelihood of a pullback. A sell-on-rise strategy is more suitable in this scenario, especially for traders who want to avoid excessive risks. It would be wise to wait for a breakout before making any significant moves, but selling near resistance levels offers a lower-risk opportunity under current conditions.
Conclusion
For the Nifty Energy Index, the key level to watch is 44,325, where traders should book profits and wait for a decline towards the support levels before considering new long positions. In contrast, the Nifty Pharma Index remains within the range, but the overbought environment suggests that a sell-on-rise strategy is appropriate. Risk-averse traders must wait for a breakout from the range, while more aggressive traders can trade within the range with tight stop-losses. Both indices offer short-term profit-taking opportunities, and waiting for better entry points after the correction is the ideal strategy.
(Disclaimer: Ravi Nathani is an independent technical analyst. Opinions are his own. He holds no positions in the above indices 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 buy or sell such securities.)
First publication: September 27, 2024 | 6:17 am IST