Charts show near-term resistance for Nifty Auto, Nifty FMCG; here's why -

Nifty Auto, and Nifty FMCG indices are likely to face resistance in the near-term, hence the best trading strategy to adopt is to sell-on-rise, said the technical analyst

Market view

Upon observing the broader markets and sectorial indices, it can be inferred that the Indian financial markets are exhibiting signs of being stretched with respect to outperformance. This observation implies that the current market trend may not be sustainable over the long run.

As a result, a technical or running correction can be anticipated in the coming days, which can ultimately lead to the development of a healthy pattern on the daily charts. Therefore, it is recommended that investors exercise caution and be mindful of potential market corrections, while making investment decisions.

Nifty FMCG
Last close: 48,102
 

The index is expected to face a significant challenge in the form of stiff resistance on the charts, which is predicted to occur around 48,350. To make the most of available trading opportunities, it is recommended that investors sell the index on the rise.

In this context, it means that if the index experiences an upward trend, traders should take advantage of this surge by selling the index at a higher price. This strategy is likely to prove effective given the challenging resistance levels.

To ensure that losses are minimised, a strict stop-loss level of 48,350 must be set. This will act as a safeguard and limit any potential losses incurred due to unfavorable market conditions.

Additionally, traders should target an expected index value of 46,925, which can be achieved by implementing a sell-on-rise strategy.

Nifty Auto
Last close: 13,280.15
 

Charts suggest that the index is expected to face strong resistance around 13,325, with a stop-loss of the same level on a closing basis.

The optimal trading strategy for traders would be to sell the index and its constituents on a rise, with a target expected between 13,080-12,950.

The technical indicators, such as the RSI, are overbought and trending downward, suggesting that consolidation with negative bias could be anticipated.

Furthermore, the MACD and the signal line are intercepting downward, resulting in underperformance in the near term.

Taking into account the overall chart structure, the best trading strategy for traders would be to sell on a rise.

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