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Trading strategies in Nifty FMCG, Metal indices

According to Ravi Nathani, an independent technical analysts, the Nifty Metal Index is exhibiting a range-bound trade, whereas the FMCG index presents a 'Sell on rise' opportunity.

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Ravi Nathani Mumbai

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NIFTY METAL INDEX
Bias: Range-Bound

The NIFTY METAL INDEX, a key benchmark index that tracks the performance of the metal sector in the stock market, has recently exhibited a near-term range-bound behavior on the price charts.

The current market price (CMP) of the index has been fluctuating within a range of 5,800 to 5,200 points, creating a consolidation pattern that indicates indecision among market participants.

A crucial factor to watch for in this scenario is a decisive close above or below this range, which could potentially trigger a directional movement in the market. If the index manages to close above the upper range of 5,800 points, it may indicate bullish momentum and could lead to a potential resistance zone in the range of 5,900 to 6,100 points, as per the chart analysis.

On the other hand, if the index fails to sustain above the lower range of 5,200 points and closes below it, it may signify bearish sentiment and could pave the way for further downward movement toward the support levels of 5,060 to 4,850 points, as suggested by the chart analysis.

It is worth noting that the NIFTY METAL INDEX has been displaying a consolidation pattern, which is a period of price compression characterized by lower volatility and trading volume. This suggests that market participants are currently cautious and awaiting a clear breakout or breakdown from the current range before establishing fresh positions.

In conclusion, based on the technical analysis of the NIFTY METAL INDEX CMP, the near-term outlook suggests a range-bound behavior with resistance expected around 5,900 to 6,100 points on a close above 5,800 points, and potential support levels of 5,060 to 4,850 points on a close below 5,200 points.

NIFTY FMCG INDEX
Bias: Sell on the rise

The sector has recently experienced a sharp rally over the past fortnight. As a result, the index has entered an overbought zone, which could potentially signal a near-term period of underperformance in the market.

Based on technical analysis, it is anticipated that the NIFTY FMCG INDEX may face some headwinds in the near term, and traders are advised to exercise caution. A sell-on-rise strategy could be considered, with a strict stop loss of 47,000 points on a closing basis to manage potential risks.

Chart analysis suggests that the index may find support levels around 46,180 to 45,900 points, which could potentially act as a floor for the index during any corrective phase. However, it is important to note that technical indicators, such as the Moving Average Convergence Divergence (MACD) on hourly charts, are displaying negative signals, indicating potential weakness in the index.

Additionally, the Relative Strength Index (RSI) is also sloping downwards, further corroborating the bearish outlook. Considering the above analysis, the recommended trading strategy for traders would be to sell on rallies, keeping a strict stop loss of 47,000 points on a closing basis to manage risk. Traders are advised to closely monitor the price action and technical indicators for any signs of a trend reversal or further downside potential in the NIFTY FMCG INDEX.

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

 

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First Published: Apr 19 2023 | 7:17 AM IST

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