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Nifty FMCG, Auto indices likely to underperform in near-term, show charts

The Nifty Auto index is expected to underperform in the near future, and the current rally provides an opportune moment to sell the index and its constituents

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Ravi Nathani Mumbai

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Nifty FMCG Index
The Nifty FMCG Index, currently trading at 49,118.80, presents a bearish outlook based on technical indicators. Traders are advised to sell on any rise in the index, with a strict stop loss set at 49,800. The RSI, MACD, and stochastic indicators indicate a downward trend in the near term, suggesting that underperformance is expected in the coming period.

In terms of support levels, the index has established support at 48,400 and 47,700. For traders, the recommended strategy would be to sell on any upward movement in the index, taking advantage of potential selling opportunities. On the other hand, investors are advised to exercise patience and wait for the correction to complete before considering buying positions. It would be prudent for investors to focus on accumulating near the mentioned support levels, as this may present favorable entry points.

Nifty Metal Index
The Nifty Metal Index is currently trading at 5,947.70, and is displaying a consolidation pattern on the charts. The index has established a range between 6,000 and 5,200, and a breakout above or below this range would signal the next direction for the index. Given that the index is near the upper range, it is important for traders to pay close attention to the resistance levels, placed at 6,075, 6,275, and 6,550.

Nifty Auto Index
The Nifty Auto Index is currently trading at 13,982.60, and based on technical analysis, it is recommended to adopt a "sell on rise" trading strategy for this index. The index is expected to underperform in the near future, and the current rally provides an opportune moment to sell the index and its constituents.

Technical indicators, such as the Relative Strength Index (RSI), are displaying a negative trend in the overbought zone. This indicates that the index is likely to experience a downturn soon. It is important to note that this underperformance is expected after the derivative monthly expiry.

Support levels on the charts are anticipated at 13,250 and 12,750. Investors should consider accumulating positions within this range, as it is deemed to be the most favorable point for accumulating positions based on the chart analysis.

Given that the index is currently in the overbought zone, the recommended trading strategy for both traders and investors would be to sell on any upward movements or at the current market price. It is advisable to wait for the index to approach the support levels before considering buying positions.

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Disclaimer: Ravi Nathani is an independent technical analyst. Views expressed are personal. 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.

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First Published: May 24 2023 | 7:43 AM IST

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