Technical indicators show strong support for Nifty: Is it time to buy dips?

A man talks on phone at the National Stock Exchange as its new logo for for the benchmark Nifty50 is seen on a glass-wall, in Mumbai

3 min read Last Updated : Oct 07 2024 | 7:37 AM IST

Nifty 50 Index: Strong Support Anticipated, Buy on Dips

The Nifty 50 Index is experiencing a downward trend in the near term. However, the index is approaching a strong support zone at 24,800, where traders and investors should start looking for opportunities to accumulate positions. This level is expected to provide a solid base for a potential rebound, particularly for short-term traders. Below 24,800, the index may enter an oversold zone, extending down to 24,400.

Click here to connect with us on WhatsApp

These levels present a significant buying opportunity, as a bounce is expected once the index reaches these support zones. On the upside, resistance is expected at 25,150, 25,375, and 25,800. Traders should aim to book profits near these levels after accumulating positions during the dip.

The best trading strategy for the Nifty 50 Index would be to adopt a "buy on dips" approach, as a technical bounce is likely to occur soon. The risk-reward ratio favors accumulating at the lower levels, especially as the market approaches oversold territory.

Nifty Midcap Select Index: Buy on Dips for a Technical Bounce

The Nifty Midcap Select Index has seen a sharp correction in the near term, bringing it very close to its key support level of 12,750. The current correction offers an ideal opportunity for traders to buy on dips, as a technical bounce is expected once the index reaches this support.

Accumulating positions around the current market price (CMP) or slightly below would provide good entry points for short- and medium-term trades. On the upside, the index is likely to face resistance at 13,000, 13,075, and 13,150. These levels should be used as profit-taking targets for traders who accumulate during the dip.

The steep correction makes the "buy on dips" strategy the most suitable for the near term, as the index is positioned for a rebound in the coming sessions. Traders can aim to capitalize on this technical bounce by entering positions at support and exiting near resistance levels.

Conclusion

Both the Nifty 50 Index and Nifty Midcap Select Index are positioned for potential bounces after recent corrections. For the Nifty 50, the key support level of 24,800 presents a buying opportunity, with a potential upside towards 25,800. Similarly, the Nifty Midcap Select Index is nearing its support at 12,750, offering a chance for traders to buy on dips, with resistance targets at 13,150.

In both cases, traders should focus on accumulating positions at support levels and booking profits near the identified resistance zones, following a "buy on dips" strategy for short-term gains.

(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: Oct 07 2024 | 7:36 AMIST