Is FMCG a better bet in this volatile market? What technical charts say

Nifty FMCG Index
 

The Nifty FMCG Index is demonstrating a bullish trend in the near term, as indicated by its recent upward movements on the charts. However, the index is approaching significant resistance levels, which are expected to be around 63,100 and 63,900. Given this scenario, it is advisable for near-term traders to consider booking profits as the index approaches these resistance levels. This strategy helps in locking in gains before the market potentially faces selling pressure at these higher levels.

Despite the bullish trend, the index has already experienced a substantial rally. Hence, the prudent approach for traders would be to sell or book profits near the mentioned resistance points and then look to re-enter positions during a pullback or near the support levels. The key support levels to watch for repurchasing the index are 60,950, 60,264, and 59,800. These levels provide a cushion where the index is likely to find buying interest, making them ideal points for traders to re-enter the market.

Technical indicators for the Nifty FMCG Index are currently placed in the overbought zone. This suggests that despite the recent rally, the index may face exhaustion, and the upward momentum might slow down. In such a scenario, it is crucial to book profits on the rise and prepare for a possible pullback. This approach not only secures the gains made during the rally but also positions traders to capitalize on the next upward move from lower levels.

In summary, while the Nifty FMCG Index is exhibiting bullish characteristics in the near term, the prudent trading strategy would be to book profits near the resistance levels of 63,100 and 63,900. By doing so, traders can safeguard their gains and avoid potential downside risks associated with resistance zones. After booking profits, traders should monitor the index closely and look to repurchase near the support levels of 60,950, 60,264, and 59,800. This strategy ensures that traders are well-positioned to benefit from both the current bullish trend and any subsequent pullbacks, thereby maximizing their trading efficiency and profitability.

Nifty Metal Index
 

The Nifty Metal Index has experienced a downward trend over the past fortnight, bringing it close to the oversold zone. This recent decline suggests that the index might be nearing a strong support area, which is expected to be within the range of 8,800 to 8,550. For near-term traders, this presents an opportunity to accumulate the index and its constituents in anticipation of a pullback.

The key strategy for traders would be to wait for the current correction to complete. Once the index reaches the strong support levels mentioned above, it would be a prudent time to start accumulating positions. The rationale behind this approach is that buying near the support levels minimizes risk and positions traders to benefit from the anticipated rebound.

As the index recovers from the oversold zone, it is likely to encounter resistance at higher levels. The immediate resistance levels to watch are 9,300 and 9,500. These levels represent potential profit-taking points where traders can consider selling part or all of their accumulated positions. By doing so, they can lock in gains from the pullback while reducing exposure to potential downside risks at these resistance points.

Given the current market conditions, the best advice for traders would be to patiently wait for the correction to play out and then buy near the support area of 8,800 to 8,550. This strategy allows traders to enter the market at a more favorable risk-reward ratio. As the index approaches the support zone, monitoring technical indicators for signs of a reversal or stabilization will be crucial.

In summary, the Nifty Metal Index is nearing a strong support area after a significant downtrend. Traders should look to accumulate positions within the support range of 8,800 to 8,550, anticipating a pullback. Once the index starts to recover, potential resistance levels to watch are 9,300 and 9,500. This strategy ensures that traders are well-positioned to benefit from the next upward move while managing risk effectively.

(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.)