Guide to trade in Nifty Pharma, FMCG indices; check what charts suggest

According to Ravi Nathani, an independent technical analyst, the Nifty Pharma index is quoting close to its ley support at 18,325; hence one may consider a buy on dip strategy here.

Nifty Pharma Index

The Nifty Pharma Index, currently trading at 18,525.75, is exhibiting a range-bound trend in the short term, indicating a period of consolidation.

However, in the near term, the index is approaching a critical support level at 18,325, which traders should closely monitor. A breach below this level could trigger panic selling, potentially leading to further downside momentum. If this support level is breached, the next significant support on the charts is expected around 17,750.

Considering the technical indicators such as the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI), the best trading strategy would be to initiate buy positions only when the index is trading close to the support levels.

Traders should exercise caution and wait for confirmation before entering any long positions. It is advisable to set a strict stop-loss order at the same support level on a closing basis to manage risk effectively. Once the index finds support and begins to rebound, traders can anticipate a technical bounce.

The first resistance level to watch for is around 18,700, followed by 19,100. These resistance levels may present opportunities for traders to consider taking profits or adjusting their positions accordingly.

In summary, traders in the Nifty Pharma Index should closely monitor the key support level at 18325 and be prepared to act accordingly based on market dynamics and technical signals. By exercising patience and implementing prudent risk management strategies, traders can navigate the market with greater confidence and capitalize on potential trading opportunities.

Nifty FMCG Index

The Nifty FMCG Index, currently trading at 52,825.50, is experiencing a short-term range-bound movement on the charts. However, in the near term, the index is nearing the lower range of the short-term period, which is around 52,600.

Analyzing technical indicators such as the Relative Strength Index (RSI) and Stochastic, there are indications that a technical bounce could be anticipated.

Given this scenario, the recommended trading strategy would be to consider buying the index and its constituents on dips. Traders can look for opportune moments to enter the market when the index approaches the lower range of the short-term period. This strategy allows traders to capitalize on potential upward movements following the technical bounce. 

Traders should establish a target price of 53,500 and 54,000, aiming to capitalize on the expected upward movement. It's crucial to set a strict stop-loss order at 52,500 to manage risk effectively and protect against unexpected downturns.

By buying on dips with a disciplined approach and adhering to risk management principles, traders can potentially benefit from the anticipated technical bounce in the Nifty FMCG Index.

As always, it's essential to stay informed about market developments and adjust trading strategies accordingly to navigate the dynamic landscape of the financial markets.

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