Nifty Pharma, FMCG indices trading near key resistance zone

According to Ravi Nathani, an independent technical analyst, the Nifty FMCG index is expected to face resistance around 52,250 - 52,375 range; and the Pharma index at 13,425.

Nifty FMCG Index

The Nifty FMCG Index, is currently trading at a level of 52,164.70. In order to gain further insights into the potential price movements, let's analyze the chart patterns and key resistance and support levels.

According to the chart analysis, there is a strong resistance zone expected between 52,250 and 52,375 for the FMCG Index. This range represents a significant barrier for the index to overcome, as it has previously faced selling pressure at these levels. Traders should pay close attention to price action within this range, as it could indicate a potential reversal or consolidation phase.

The price pattern suggests that this range might serve as the near-term high for the week, implying that the index could encounter difficulty in surpassing these levels in the short term.

 

To manage risk effectively, traders are advised to set a strict stoploss at 52,525. This will help protect against potential losses in case the index breaks out above the resistance range. By implementing a stoploss, traders can limit their downside risk and exit the trade if the price moves unfavorably.

On the downside, if the index fails to sustain its current levels and breaks below the range of 51,825 to 51,710, it would indicate a strong sell signal. This breakdown would suggest a shift in the market sentiment and could potentially trigger further selling pressure.

In such a scenario, traders should be prepared for a potential decline in the index. The next support levels on the charts are expected around 51,150 to 49,850. These levels are anticipated to provide some cushioning and attract buying interest. Traders should closely monitor price movements around these support levels, as they can serve as potential entry points for buying opportunities if the index shows signs of reversal.

In summary, the Nifty FMCG Index is currently facing a strong resistance zone, indicating a potential near-term high. Traders should exercise caution and consider selling opportunities within this range, with a strict stoploss in place. A breakdown below the support levels would suggest a bearish sentiment, while the support zones could provide potential buying opportunities.

Nifty Pharma Index

The Nifty Pharma Index, currently trading at a CMP (Current Market Price) of 13,238.85, is showing signs of being in an overbought zone. Traders are advised to consider selling on any price rally as the index is expected to encounter strong resistance around the 13,425 level.

On the downside, there is support anticipated on the charts around 13,100 and 12,925. These levels may act as cushions and provide some buying interest for the index.

The RSI (Relative Strength Index), a technical indicator used to assess the momentum of an asset, is displaying a downtrend. This further supports the selling bias for the index and its constituents.

Given these factors, selling on rallies is considered the best trading strategy for the Nifty Pharma Index. Traders should look for opportunities to sell the index at higher prices, taking advantage of the potential downward movement.

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