Ravi Nathani suggests 'buying on dips' in Nifty Energy, cautious on FMCG

The Nifty Energy index is currently consolidating, while, Nifty FMCG has witnessed a temporary technical bounce

Nifty Energy index: Consolidation phase with bullish long-term outlook

The Nifty Energy index, following a sharp correction, is currently consolidating within a defined range of 37,575 on the upper end and 35,575 on the lower end. This 2,000-point range indicates a phase of stabilisation as the index digests recent movements, providing a potential foundation for the next major directional move. 

 

Until a breakout occurs, this range is likely to dictate short-term trading strategies. For traders, the best approach during this consolidation is to buy near the support level of 35,575 and sell near the resistance at 37,575. This strategy capitalises on the predictable oscillations within the range while maintaining strict stop loss levels to protect against potential breakdowns. 

 

The long-term outlook for the index remains bullish, supported by its performance on higher time-frame charts. Indicators point to a likely resumption of the upward trend once the consolidation phase concludes. Notably, the upcoming monthly derivative expiry could act as a catalyst, potentially triggering an upward breakout. 

 

As such, buy on dips remains a preferred strategy for traders and investors looking to position themselves for the anticipated uptrend. Resistance levels to watch for post-breakout are expected at 38,500 and 39,250, while a breakdown below the current support could lead to further downside, making 34,800 a crucial level to monitor. 

 

In summary, the Nifty Energy index offers opportunities for range-bound trading in the short term while maintaining a bullish bias for the long term. Traders are advised to stay vigilant, align trades with the support-resistance framework, and prepare for a potential breakout that could pave the way for significant gains.

 

Nifty FMCG index: Consolidation with bearish near-term bias

The Nifty FMCG Index, following a sharp correction, has witnessed a temporary technical bounce. However, this rebound is expected to lose steam post the monthly derivative expiry, potentially leading the index to retest its recent low of 55,750. 

 

The current placement near the resistance range of 58,250–58,500 suggests limited upside potential in the near term. In the coming days, the index is likely to enter a consolidation phase, oscillating between the resistance at 58,500 and the support at 55,750. 

 

For traders, this creates opportunities for range-bound strategies, with buying near the support and selling near the resistance being the most effective approach until a clear breakout materialises on the charts. Risk-tolerant traders may consider selling at current levels (CMP), given the proximity to the upper resistance band and the likelihood of the index retesting lower levels. 

 

However, safe traders and investors are advised to stay on the sidelines until a decisive breakout is observed, as this will signal the next significant directional move. 

 

Should the index break below the 55,750 support, it could trigger further downside momentum, making 54,800 the next critical support level to watch. Conversely, a breakout above 58,500 would indicate renewed bullishness, with targets of 59,500 and 60,000 in sight. 

 

In summary, the Nifty FMCG index is poised for a period of consolidation in the near term, with a bearish bias. Traders should adopt a cautious approach, leveraging the support-resistance framework, and be prepared for potential volatility in the days ahead.

 

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