NIFTY FMCG Index
Last close: 49,406.10
Outlook: Sell on rise or book profit for short term
The Nifty FMCG index is currently exhibiting a phase of range-bound movement, characterized by a specific intraday no-trader zone spanning from 49,483 to 49,330. Traders should exercise a cautious approach within this range as it signifies a period of uncertainty and indecisiveness in the market.
On the upside, the index encounters notable resistance levels at 49,530, 49,607, and 49,731, which pose potential barriers for further upward movement and may attract selling pressure.
Conversely, on the downside, significant support levels can be observed at 49,282, 49,206, and 49,082, indicating potential zones where buying interest may emerge, possibly leading to a temporary stabilization or reversal of the index's direction.
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In terms of the short-term trend, the index demonstrates a prevailing bullish bias, as reflected by the current RSI number of 78.53, which indicates strong buying momentum in the FMCG sector.
However, it is noteworthy that the RSI trend is currently sloping downward, suggesting a potential reversal or weakening of the bullish sentiment. Traders should closely monitor this trend and remain vigilant for any signs of a loss in bullish momentum, as it could indicate a shift in market dynamics and a possible downtrend in the near future.
Considering the technical analysis, it is advisable for traders to adopt a strategic approach by either selling on a rise or booking profits near the resistance levels mentioned earlier.
This approach allows traders to take advantage of potential selling pressure and capitalize on short-term market fluctuations. Additionally, it is crucial to pay close attention to the price action around the achieved R2 level of 49524, as it has historically triggered selling activity in the market.
Therefore, traders and investors are recommended to either book profits or sell on a rise, given the expected underperformance of the Nifty FMCG index and its constituents in the near term.
NIFTY Metal Index
Last close: 5,683.45
Outlook: Sell on Rise
The Nifty Metal Index, currently positioned at 5683.45, presents a bearish trend on the near-term charts, warranting a sell-on-rise approach for traders. The index's current trading level is in proximity to the pivot levels situated around 5,690, emphasizing the importance of this price region.
A trade and subsequent close below the recent low at 5,625 would signify a significant breakdown, potentially paving the way for a further decline towards the 5,300 level.
In simpler terms, the last remaining hope for bullish traders lies at 5,625, as a breach of this level would tip the balance in favor of bears in both the near and short term.
Technical indicators, such as the Relative Strength Index (RSI) registering at 46 on the daily charts, depict a downward trajectory, indicating an anticipated period of underperformance.
Consequently, the optimal trading strategy for traders would involve selling on price rallies or booking profits and exercising caution until the ongoing correction cycle reaches its completion.
(Ravi Nathani is an independent technical analyst. Views expressed are personal).
