Ravi Nathani recommends buy-on-dips strategy for Nifty Energy & Nifty FMCG

Nifty FMCG: The range-bound movement of Nifty FMCG, within a defined range of 58,025 to 55,625, reflects a lack of clear directional bias for the index

Nifty Energy Index: Bullish Bounce Amid Oversold Conditions

  The Nifty Energy Index has witnessed a sharp rally that has altered its near-term trend, suggesting the potential for a technical bounce. Despite the broader downtrend in recent sessions, the rally indicates renewed bullish momentum, supported by oversold technical conditions. Key resistance levels are identified at 35,375 and 37,250, which could act as upside targets in the coming sessions. 

  Traders are advised to adopt a buy-on-dips strategy or accumulate positions at the current market price (CMP), with a strict stop loss at 32,490 on a closing basis. This stop loss ensures disciplined risk management and minimises potential downside exposure. Technical indicators such as the RSI and Stochastic oscillators are in oversold territory, further validating the likelihood of a bullish continuation. These indicators reflect a recovery from oversold conditions, suggesting that the index and its constituents are poised for upward movement in the near term. Given this setup, traders should focus on accumulating positions during dips or maintaining existing long positions, targeting the aforementioned resistance levels. 

 

  A sustained break above 35,375 could reinforce the bullish outlook, while any reversal below 32,490 would negate the positive momentum. 

  In conclusion, the Nifty Energy Index is displaying signs of a technical recovery, making a buy-on-dips strategy the most prudent approach. By aligning trades with the evolving trend and adhering to strict stop-loss levels, traders can effectively capitalise on the current bullish momentum.

 

Nifty FMCG Index: Consolidation Phase with Potential Accumulation Opportunity

  The Nifty FMCG Index is currently in a consolidation phase on the near-term charts, oscillating within a defined range of 58,025 to 55,625. This range-bound movement reflects a lack of clear directional bias, with the index trading near its lower boundary. For safe traders, the best strategy would be to await a breakout above 58,025 for confirmation of a sustained upward move or a breakdown below 55,625 for a bearish signal. However, for risk-tolerant traders, the current close near the lower end of the consolidation range presents a potential opportunity to accumulate the index and its constituents. 

  Buying at the current market price (CMP) or on dips is advisable, with a strict stop loss set at 55,600 on a closing basis to mitigate risk. 

  Technical indicators such as RSI and Stochastic are largely sideways but nearing oversold zones. Additionally, there is a divergence forming, suggesting the potential for a reversal or an upside move within the consolidation range. 

  Traders should closely monitor price action and volume for signs of increased buying interest, particularly as the index approaches the lower boundary of the range. The initial target for accumulation would be the upper boundary of the range at 58,025, where resistance is likely. A breakout above this level could signal the end of the consolidation phase and a resumption of bullish momentum. 

  In conclusion, while the Nifty FMCG Index remains range-bound, accumulation on dips near the lower end of the range with a disciplined stop-loss strategy offers an attractive risk-reward opportunity for traders.

 

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.