Buy Nifty FMCG on dips; Metal to gain strength above 8,100, suggest charts

According to Ravi Nathani, an independent technical analyst, technical indicators such as RSI and MACD are signaling potential for a technical pullback in the near term on the Nifty FMCG index.

Nifty FMCG Index

Last close: 54,419.20

The Nifty FMCG Index, currently trading at a CMP (Current Market Price) of 54,419.20, presents an intriguing technical scenario that calls for a closer look.

Technical indicators, particularly the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), are signaling potential for a technical pullback in the near term.

These indicators are invaluable tools for gauging market momentum and identifying potential reversal points. A buy-on-dips strategy emerges as the most prudent approach in this context.

Traders are advised to initiate buy positions on downward price movements, capitalizing on favorable entry points. However, risk management is crucial, and a strict stop-loss at 54,100 on a closing basis is recommended to mitigate potential downsides.

This strategic approach aligns with the anticipation of a pullback, providing traders with the opportunity to benefit from upward price movements. The target levels for this strategy are set at 55,000 and 55,500. These levels represent potential areas of resistance that traders should monitor closely. The successful execution of this trading strategy relies on the ability of the index to navigate these resistance levels, further confirming the strength of the anticipated pullback.

Nifty Metal Index

Last close: 8,069.40

Turning our attention to the Nifty Metal Index, currently at a CMP of 8069.40, a technical bounce is anticipated if the index manages to sustain trading above 8,100. 

This suggests that the 8,100 level holds significance in determining the index's near-term direction. Traders should monitor this threshold closely as a sustained breach could signal a resumption of upward momentum.

The identified resistance levels at 8,250 and 8,425 become potential targets for traders in the event of a successful bounce. However, cautious risk management is paramount, and traders are strongly advised to adhere to a strict stop-loss at 7,910. This level serves as a critical point to reassess positions, as a breach could indicate a reversal in the upward trend.

In summary, both the Nifty FMCG and Metal Indices present unique trading opportunities based on their respective technical landscapes. The buy-on-dips strategy for the FMCG Index is anchored in the signals from RSI and MACD, while the Metal Index emphasizes the importance of the 8,100 level for a potential bounce.

Traders must remain vigilant, adjusting positions based on observed price actions and strictly adhering to set stop-loss levels to effectively manage risks in these dynamic market conditions.

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