Nifty Pharma Index
The Nifty Pharma Index is currently exhibiting a bullish trend on the charts, indicating a positive market sentiment towards this sector. However, the index is nearing its resistance level, suggesting that it might face some challenges in breaking higher in the short term. The current consolidation range for the index is expected to be between 23,125 and 22,710. A trade above 23,125 would likely trigger a bullish move, while a trade below 22,710 could lead to a bearish trend. Given this situation, the best trading strategy for near-term traders would be to wait for a clear breakout above or below this range before making any significant trading decisions.
Despite the overall bullish trend, there are signs that some profit booking might occur at current levels. Technical indicators, such as the RSI and MACD, may be hinting at overbought conditions, suggesting that the upward momentum could be slowing down. This could lead to a temporary pullback, providing an opportunity for traders to book profits. My inclination, based on the current market dynamics, is towards selling on any significant rise or at the current market price (CMP), given the signals from technical indicators that suggest potential profit booking.
Support levels on the charts are expected around 22,650, 22,450, and 22,100. These levels could serve as potential buy zones for traders looking to enter long positions if the index pulls back. These support levels are critical, as they represent price points where buyers might step in, halting the decline and potentially pushing the index back up. Therefore, traders should closely monitor the index’s behaviour around these levels to gauge market sentiment and make informed trading decisions.
Nifty FMCG Index
The Nifty FMCG Index is currently showing signs of a near-term correction, suggesting that the recent upward momentum may be slowing down. This indicates that the index might face some downward pressure before it can resume its upward trajectory. For traders, the best strategy in this scenario would be to sell on any rise and book profits at higher levels. This approach allows traders to lock in gains from the recent uptrend and avoid potential losses from the anticipated correction.
Support levels are crucial in this corrective phase, and for the Nifty FMCG Index, key support levels are identified at 61,180 and 59,500. These levels serve as potential buy zones, where traders might consider re-entering the market after the correction has played out. By waiting for the index to reach these support levels, traders can take advantage of lower entry points, enhancing their chances of profitable trades when the market stabilises and resumes its upward movement.
The correction phase is expected to take some time, potentially over the next 60 days. During this period, traders should be cautious and avoid rushing into new positions until there is clear evidence that the correction has reached its support levels and the market is ready to bounce back. This patient approach will help traders avoid unnecessary risks and better position themselves to capitalise on the expected pullback.
(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: Aug 30 2024 | 6:15 AM IST
