Muhurta Trading Strategy: Nifty 50 may fall below 24,900, caution is necessary, says Kapil Shah of MK Global

diwali 2024: Market experts estimate that Samvat 2081 will have a major impact on the global economy. Important factors to watch throughout Samvat 2081 will include the central elections, Union Budget, recovery of China’s economy, activities during the festive season, volatility in crude oil prices and investment inflow levels.

During the year, Samvat 2080 has been an extraordinary time for the Indian equity market, characterized by consistently hitting new records each quarter. Nifty 50 achieved a historic high of 26,216 on September 26, 2024, which happened for the first time in its history. According to various reports, this milestone has taken the Indian market capitalization past the $5 trillion mark, making it the fourth largest market in the world.

The market has seen a continuous decline in October nifty 50 According to experts, there has been a decline of almost 7%, while the broader market has felt even more pressure, showing no signs of recovery. Kapil Shah, Technical Analyst MK Global And a technical analysis coach guides investors and traders on how to manage this volatility as they enter Samvat 2081.

Muhurat Trading strategy– Call for caution this Diwali 2024, says Kapil Shah, technical analyst at Emkay Global and technical analysis instructor at Finlearn Academy.

Kapil Shah provides his insight on Nifty 50 for the Diwali 2024 season. He advises traders and investors to exercise caution during this Diwali 2024 timeframe. During rising prices, it may be wise to think about taking profits.

Watch Kapil Shah’s in-depth analysis here:

Since the inception of NSE, there have been 7 major uptrends in Nifty 50 ranging from 26 months to 56 months. 6 of the 7 increases were between 40 and 56 months. The recent rally is 54 months, indicating the maturity of the trend in terms of time.

The formation of Bearish Engulfing Pattern had a negative impact on the Nifty 50 monthly chart. Major tops in the past have coincided with bearish patterns. However, there have been some observations where a very brief decline has been observed in the index. After the bearish phase, the selling pressure will continue for at least the next month. Looking at the current scenario, selling pressure may be seen on the index in the month of November also.

Since 2008, significant peaks have displayed a spiky “M” formation. This particular pattern generally requires at least 4 months to fully materialize. Although this is currently considered a premature development, the emergence of this pattern is likely to generate a substantial reaction in the market.

Notably, the reform profile over the past year has shown a significant change. Earlier, the market had seen a decline of 5% in a period of 7 to 9 days. However, this time the index has suffered a decline of about 6.5% within 17 trading sessions. Furthermore, it is worth highlighting that the index has formed both a Head and Shoulders pattern and an Inverted Flag pattern, both of which indicate bearish trends.

The table presented above is made on seasonal basis and clarifies the performance of the respective months of different sectors. A sector is considered strong if its indices show a positive closing above 65%, and weak if below 40%. The historical period of most indices is more than 12 years. It is mandatory to demand technical verification. This data can be helpful in strategically moving areas.

In the immediate term, the index is projected to exhibit a negative bias below the 24,900 range. There is a possibility of a decline between 24,000 and 23,800. A breach below 23,800 could lead to further decline within the range of 22,800 to 21,800. As a result, traders and investors are advised to exercise caution during this Diwali period. During intermediate upward movements, it may be prudent to consider booking profits.

Disclaimer: The above views and recommendations are those of individual analysts, experts and broking companies, and not of Mint. We recommend investors to check with certified experts before taking any investment decision.