Ravi Nathani recommends to buy IT, FMCG stocks on dips; Avoid metals

With an view to capitalize on a potential technical bounce, the technical analyst advises traders to adopt a buying strategy near the support price.

Nifty IT Index

Bias: Buy on dips

The Nifty IT Index, currently stands at 29,313.55, reflecting a downward trend in the near term. Chart analysis suggests that the index may find support around 29,130, with the technical indicator MACD indicating a positive divergence on charts.

Traders are advised to keep this level handy, as it may also serve as a near-term stop-loss point. However, if the index violates this level, it may find its next support directly around 28,725, which would be considered an over-sold zone in the near term, supported by the Pivot S2 levels for the week.

To capitalize on a potential technical bounce, traders are advised to adopt a buying strategy near the support price. This is expected to offer traders the best trading opportunity in the current market conditions.

Nifty FMCG Index

Bias: Buy on dips

The Nifty FMCG Index currently stands at 44,953.60. In the near term, the trend is down, but a correction noticed in the last fortnight has brought the index close to its support level.

This suggests that a technical bounce may be expected in the near term, with the index potentially rallying and facing resistance around 45,750. For traders, the best strategy would be to buy on dips, with a strict stop-loss of 44,850, as a close below this level could result in the index finding its next support around 44,500.

As a result, traders are advised to buy on dips with a target of 45,750. However, if the market dips below 44,850, one could go short with a target of 44,500.

In summary, while the near-term trend for the Nifty FMCG Index is down, traders may still be able to capitalize on the potential for a technical bounce by adopting a well-informed trading strategy.

Nifty Metal Index

Bias: Sell on the rise

The Nifty Metal Index currently stands at 5,588.10. After analyzing its daily charts, it appears that a sell-on-rise strategy may be the most appropriate approach for traders. This is due to the index facing a strong resistance level around 5,775, which could also serve as a stop-loss level.

On the other hand, the index's support level is expected to be around 5,520-5,420, suggesting that traders should consider selling the index and its constituents on rallies, with a stop-loss level set at the aforementioned resistance level.

This trading strategy is likely to provide traders with the best opportunity to profit in the current market conditions. Overall, while the Nifty Metal Index faces significant headwinds, traders may still be able to benefit from market volatility by adopting a well-informed trading strategy "Sell on the rise".

(Ravi Nathani is an independent technical analyst. Views expressed are personal).