The Nifty index has had a significant drop, placing it firmly in the oversold zone according to important technical indicators such as RSI, MACD, and Moving Averages. This condition indicates that the index is poised for a technical rebound, particularly in the absence of negative global developments.

This week, coinciding with the monthly derivative expiry, could be a watershed moment, with the larger trend predicted to tilt toward positive momentum. The index finds important support at 23,250, 23,000, and 22,800, which are expected to halt further drops. 

On the upside, resistance levels are set around 23,950, 24,400, and 24,800, which could serve as immediate objectives for the expected recovery. The RSI suggests oversold circumstances, pointing to a comeback, while the MACD indicates that bearish momentum is receding. 

The Moving Averages lend credence to this viewpoint, implying that the correction phase may have reached its conclusion. The recommended trading strategy is to buy on dips, with a strict stop-loss of 23,200 on a closing basis to protect against any unexpected downturns. 

Bullish sentiment may gain traction, aided by short-term recovery patterns and rising market confidence. Traders should pay special attention to resistance levels as potential profit-booking zones, as well as global indications that may impact market dynamics. Overall, the index appears to be on track for a recovery, providing a favorable risk-reward opportunity for traders looking to capitalise on the near-term rebound.

A disciplined approach with specific stop loss and profit targets is required to navigate this unpredictable period.

Nifty Midcap Select index awaiting a rally for clear direction

The Nifty Midcap Select index is currently range-bound, swinging between 12,325 on the high side and 12,025 on the low. This consolidation period suggests that the market is looking for a clear signal to create a definitive trend. 
 
Until a breakout above or below this range occurs, traders should proceed cautiously. For the time being, the ideal trading strategy for conservative traders is to wait for a decisive breakout before taking positions, as this will provide clarity on the next move. 

For risk-tolerant traders, this range presents an opportunity to profit by buying around the support at 12,025 and selling near the resistance at 12,325, with a strict stop loss at the breakout levels to limit risk. If the index rises over 12,325, the following resistance levels are projected at 12,425, 12,500, and 12,725, providing higher targets for bullish bets.

Conversely, if the index exceeds the lower limit at 12,025, the next support levels are 11,925 and 11,800, implying further downside possibilities. Indicators such as RSI and MACD remain neutral, reflecting the current consolidation phase.

The situation emphasizes the value of patience for traders, as the next substantial movement is likely to be initiated by a breakout.

In conclusion, while the index remains range-bound, both breakout and range-based strategies can be used, but only with prudence and disciplined risk management.