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Nifty Realty Index: Book profits and stay in cash
The Nifty Realty Index closed at 841, displaying a strong bullish trend. The next significant resistance level is observed at 856, indicating a potential upward movement.
However, caution is advised as key technical indicators signal overbought conditions.
The Stochastic Oscillator, a momentum indicator, is currently at an elevated level of 97.46, suggesting that the market may be overextended. A reading above 80 is considered overbought, indicating a higher likelihood of a reversal or correction.
The Relative Strength Index (RSI) is at 80.25, reinforcing the overbought sentiment. RSI values above 70 are typically seen as a signal for a potential reversal or a period of consolidation.
Furthermore, the Commodity Channel Index (CCI) stands at a notably high 241.90, signaling an overbought market condition. Such extreme CCI levels often precede a pullback or a reversal in the price trend.
Considering these technical indicators, it is advisable to exercise caution in initiating fresh long positions at current market prices (CMP).
Investors may consider booking profits either at the CMP or during any subsequent rise in prices. The overbought conditions suggest a potential correction or consolidation, and therefore, it may be prudent to wait for a more favorable entry point before considering new long positions.
In summary, the Nifty Realty Index exhibits a strong bullish trend, but caution is warranted due to the overbought signals from key technical indicators.
Investors are advised to monitor the index closely, considering profit booking at the CMP or on any further price appreciation and refraining from fresh long positions at this juncture.
Nifty FMCG Index: Caution needed amid overbought signals
The Nifty FMCG Index concluded at 57,704, showcasing a robust uptrend. The immediate hurdle lies at 58,100, suggesting a potential upward continuation.
However, a cautious approach is warranted as key technical indicators signal overbought conditions.
The Stochastic Oscillator is notably high at 94.56, indicating the index's overextended status. Readings above 80 typically suggest a potential reversal or consolidation in the near term.
The Relative Strength Index (RSI) stands at 81.16, reinforcing the overbought sentiment. RSI levels exceeding 70 indicate a possible correction or sideways movement.
The Commodity Channel Index (CCI) is at 139.23, further emphasizing the overbought condition. Such elevated CCI values often precede a pullback or a reversal in the prevailing trend.
On the downside, key support levels are identified at 55850, 54850, and 52800, providing reference points for potential retracements.
Given the overbought signals, it is advisable to exercise caution. Investors may consider booking profits either at the current market price (CMP) or on any subsequent rise.
Fresh long positions are not recommended at this juncture, as the technical indicators suggest a likelihood of a corrective phase or consolidation.
In conclusion, while the Nifty FMCG Index exhibits strength, investors should be vigilant due to the overbought signals.
Consideration of profit booking at CMP or during a rise is prudent, and refraining from initiating fresh long positions is recommended until a more favorable entry point is identified.
Disclaimer: Ravi Nathani is an independent technical analyst. 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.
