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How to trade Nifty Pharma, Metal indices today, Jan 16? Check levels here

The Nifty Pharma Index is witnessing a bearish trend in the near term, with strong support anticipated in the range of 21,825 to 21,700

share market stock market trading

Ravi Nathani Mumbai

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Nifty Pharma Index: Oversold Conditions Indicate Potential Accumulation Opportunity
 
The Nifty Pharma Index is witnessing a bearish trend in the near term, with strong support anticipated in the range of 21,825 to 21,700. A decisive close below this range could lead to fresh selling pressure, pushing the index towards its subsequent support levels at 21,475, 20,950, and 20,150. Technical indicators, however, highlight that the index is currently in the oversold zone, suggesting the possibility of a relief bounce in the short term. This makes short selling at current levels inadvisable. Instead, traders should focus on identifying opportunities to accumulate the index on dips or at the mentioned support levels, where buying interest is likely to emerge. Risk management is critical in this setup, and traders are advised to maintain a strict stop loss at either 22,900 or 23,000, depending on their risk appetite. This ensures protection against any unforeseen volatility. A patient approach is recommended, with traders awaiting signs of stabilisation near the key support levels before initiating long positions. In conclusion, while the near-term trend remains bearish, the oversold conditions and proximity to strong support levels present an attractive risk-reward opportunity for accumulation. Traders should avoid short selling and instead prepare to capitalise on the anticipated relief bounce, aligning their strategy with the evolving technical setup and adhering to disciplined stop-loss levels.
 
 
Nifty Metal Index: Awaiting Consolidation After a Technical Bounce
 
Following a sharp correction, the Nifty Metal Index has entered the oversold zone, prompting a technical bounce. However, this rally is expected to face stiff resistance within the 8,325–8,575 range, where selling pressure could resurface. On the downside, strong support levels are identified at 8,125 and 7,975, which could provide a favorable entry point for accumulation. The best trading strategy under the current setup is to reduce existing positions during rallies toward the resistance zone and avoid buying at the current market price. Instead, traders should wait for the index to approach the identified support levels, as a consolidation phase around these levels would provide a more reliable buying opportunity. This approach aligns with the expected consolidation pattern, which may persist for some time after the initial rally and subsequent correction. Patience and disciplined risk management are crucial, as premature entry at higher levels could expose traders to unnecessary volatility. In conclusion, while a small rally is anticipated in the near term, the focus should remain on reducing positions near resistance and accumulating during the second correction near the support levels. This strategy allows traders to optimise risk-reward by capitalising on the expected consolidation phase and avoiding the pitfalls of buying into resistance.
 
(Disclaimer: Ravi Nathani is an independent technical analyst. Views are his own. He does not hold any positions in the Indices mentioned above and this is not an offer or solicitation for the purchase or sale of any security. It should not be construed as a recommendation to purchase or sell such securities. )
 

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First Published: Jan 16 2025 | 7:00 AM IST

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