What to do with Nifty Energy & FMCG today; Ravi Nathani suggests

Nifty Energy is currently trading near critical support levels, around 37,700 and Nifty FMCG is showing a clear downtrend on the charts, with a key support level anticipated around 55,900

Nifty Energy: Buy-on-dips strategy for potential technical rebound

The Nifty Energy Index is currently trading near critical support levels, around 37,700, with a support range expected between 37,500 and 37,700. This range could potentially act as a strong support zone, where downward momentum may pause or reverse. 

 

Despite the ongoing downtrend, the recent correction has pushed key technical indicators, such as the RSI, Stochastic, and MACD, into oversold territory. This positioning suggests a heightened possibility of a technical bounce in the near term, making buy-on-dips an attractive trading strategy. 

For those looking to capitalise on a rebound, accumulating positions near the support levels of 37,700, 37,500, and 37,250 is advised. This approach aligns well with the expected potential for an oversold bounce, which could offer short-term profit opportunities. Resistance on the charts is anticipated at around 38,000, followed by a more substantial level at 38,800. 

 

These levels could serve as ideal exit points for traders seeking to capture gains from a rebound. In summary, while the trend remains downward, the oversold condition of technical indicators points to a promising setup for a technical bounce. 

 

The buy-on-dips strategy, with entry points around the defined support range, offers a favorable risk-reward scenario, particularly for traders looking for short-term opportunities. 

 

Traders should keep a close watch on the support and resistance levels, as well as any shifts in technical indicators, to optimise entry and exit decisions.

Nifty FMCG: Sell-on-rise strategy amid downward trend

The Nifty FMCG Index is showing a clear downtrend on the charts, with a key support level anticipated around 55,900. This support level is critical, and until the index nears it, traders and investors are advised to either wait for the correction to play out or, for those with a higher risk tolerance, adopt a sell-on-rise approach. 

 

Technical indicators uniformly point towards a bearish outlook, reinforcing the cautionary sentiment in this segment. For risk-averse traders, staying on the sidelines might be the best course of action until the index completes its downward move and shows signs of stabilising near the 55,900 support mark. Meanwhile, for traders willing to engage in short-term trades, the sell-on-rise strategy remains favorable. 

 

This involves selling positions when the index experiences temporary upward movements, taking advantage of potential price declines until a more stable bottom is reached. In conclusion, the current conditions in the Nifty FMCG Index suggest continued caution. 

 

The index's downward momentum is backed by technical indicators, and strong support is yet to be tested at 55,900. The prudent trading strategy is either to wait for the correction to complete or to implement a sell-on-rise approach, allowing traders to mitigate risks while capitalising on short-term opportunities in the downward trend.  (Ravi Nathani is an independent technical analyst. Views expressed are personal.)