Ravi Nathani says Nifty FMCG still correcting, Pharma showing bearish trend

The Nifty FMCG index is currently exhibiting a downward trend in the near term, while Nifty Pharma index continues to exhibit a bearish trend in the near term

Nifty FMCG index: Awaiting completion of correction for a rebound

The Nifty FMCG index is currently exhibiting a downward trend in the near term, with support levels identified around 55,180 and 54,650. Following a significant short-term correction, initiating fresh short-selling positions is not recommended. Instead, traders should wait for the ongoing correction to stabilise before considering accumulation at these support levels for a potential technical bounce. 

 

In the short term, the index is expected to trade within a range of 57,000 on the upper side and 54,650 on the lower side. A definitive close above or below this range could act as a trigger for the next directional move. Until such a breakout occurs, traders should remain cautious. For risk-averse traders, the best strategy would be to stay on the sidelines and avoid taking new positions until clearer signals emerge. 

 

However, risky traders might consider employing a buy-near-support and sell-near-resistance strategy, capitalising on short-term price fluctuations within the defined range. Technical indicators are signalling an oversold condition, suggesting that the index is nearing a potential bottom. Once the correction concludes, the FMCG index could provide attractive entry opportunities for medium-term gains. 

 

In summary, the Nifty FMCG index requires patience as it navigates through its correction phase. Traders should focus on the key support and resistance levels of 54,650 and 57,000, respectively, while awaiting signs of stabilisation or a breakout to confirm the next trend.

 

Nifty Pharma index: Downtrend with potential for further declines

The Nifty Pharma index continues to exhibit a bearish trend in the near term, with short-term selling pressure likely to intensify if the index breaks below the critical support level of 21,400. 

 

A close beneath this level would confirm a downtrend, paving the way for further declines to 20,880 and 20,200. Resistance is currently noted at 22,260, providing an ideal level for traders to initiate short positions. The best strategy at this juncture is to sell on rises and remain in cash until clearer signs of stabilisation emerge. 

 

Investors and traders are advised to avoid taking long positions as the overall sentiment remains weak. Technical indicators and chart patterns suggest that the bearish momentum may persist in the short term. A breach of the 21,400 level would confirm the continuation of the downtrend, while any upward moves are likely to be capped by the 22,260 resistance. 

 

In conclusion, the Nifty Pharma index is in a vulnerable position, with downside risks outweighing the potential for recovery. Traders are encouraged to focus on shorting opportunities near resistance levels and maintain a cautious stance until the index either stabilises above critical support or completes its corrective phase. Key levels to monitor: 21,400 (support) and 22,260 (resistance).  (Ravi Nathani is an independent technical analyst. Views expressed are personal.)