After a sharp decline in the previous session, the benchmark Nifty 50 index finally tried to recover on the last day of the week, currently gaining 71 points to 22,031, by 1:48 AM IST. The metal index is the biggest sectoral gainer with a current rally of 1.34%, while the realty space is in the red.
The index has continually fallen from 22,794, marked on 3 May 2024 without any noticeable bounce on the way down. But this selling pressure might soon come to an end as Nifty 50 is now approaching its strong support level of 21,700 - 21,800.
This demand zone should be kept on the radar as it is where a good long opportunity can materialize. Although, the current rate is almost 250 points far from this zone, patiently waiting for a dip can be fruitful.
As the index has still not made a lower top and lower bottom formation, the downtrend has not yet materialized. However, the stiff resistance around 22,750 - 22,800 should not be ignored, especially after a double top trend reversal pattern is taking place.
So ideally, this is a range-bound market where selling the rallies and buying the dips can be rewarding rather than trying to play a strong direction. As the index is now approaching the lower end of the range a long opportunity should be explored.
Profit booking and new short positions can be initiated once the upper end of the range is on the screen, i.e. 22,700 - 22,800.
Another thing to note is the rapid jump in India VIX, which is up for 12 consecutive sessions to 18.46 which is a 52-week high. This behavior simply reflects increasing uncertainty in the market pertaining to upcoming Lok Sabha election results. Therefore, traders should be extremely cautious of their positions for the next couple of months.
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