Ravi Nathani suggests buying dips in Nifty Metal; sell on rise in pharma

Nifty Metal is currently approaching critical support levels between 8,800 and 8,700, while Nifty Pharma Index shows a clear downtrend on the charts

Nifty Metal: Buy-on-dips strategy amid expected range-bound movement

Nifty Metal is currently approaching critical support levels between 8,800 and 8,700, where selling pressure is anticipated to slow, potentially leading to a technical bounce. This support range offers an opportunity for traders to buy on dips with a stop loss set at 8,700 on a closing basis. 

 

The anticipated bounce is likely to encounter resistance at 9,100 and 9,336, making these levels ideal profit-taking points. After the initial support holds and the anticipated upward move materialises, the index may consolidate within a range between 8,700 and 9,350. This range-bound behavior presents an additional strategy opportunity for traders: accumulate near support levels and exit near resistance during each cycle of the consolidation. 

 

 

In the short term, this pattern allows for recurring entry and exit points aligned with the support and resistance levels established by the range. For near-term traders and investors, the preferred strategy is to buy on dips as the index approaches the lower range support. 

 

With support holding at 8,700, the technical indicators suggest a buy-on-dips approach for a quick bounce toward the resistance zones. Post this expected recovery, traders can shift to range-bound strategies, taking advantage of predictable movements within the 8,700–9,350 consolidation range. 

 

In conclusion, the Nifty Metal index is poised for a potential technical bounce, with significant support at 8,700 and resistance near 9,100 and 9,336. Traders should focus on accumulating positions near the support with a strict stop loss, while looking to capitalise on a range-bound trading approach as the index stabilizes within the 8,700–9,350 corridor.

 

Nifty Pharma: Bearish outlook with sell-on-rise strategy

The Nifty Pharma Index shows a clear downtrend on the charts, with technical indicators like RSI and MACD not supporting a near-term reversal. This bearish sentiment suggests the potential for further downside, with key support levels identified at 21,600. 

 

A decisive break and close below this level could trigger an additional round of selling, with subsequent support zones anticipated around 20,900 and 20,200. Given the current chart pattern, the recommended trading approach is to sell on rise, as any upward movement may be short-lived and offer better entry points for short positions. 

 

The resistance levels to monitor are 22,250, 22,400, and 22,550. These levels present potential zones where selling could be initiated or intensified, aligning with the broader downtrend. In the short-to-mid term, the Nifty Pharma index is expected to underperform, and buying opportunities may only arise once the ongoing correction is complete. 

 

Until then, traders are advised to refrain from establishing long positions and instead adopt a wait-and-sell approach as the index approaches resistance levels. This strategy allows traders to benefit from anticipated downward moves while remaining aligned with the overall trend. 

 

In conclusion, the Nifty Pharma Index’s bearish setup supports a sell-on-rise strategy, with further declines likely if 21,600 is breached. 

 

Traders should focus on resistance levels for entry points on short positions while awaiting the completion of the correction phase for any potential long positions.  (Ravi Nathani is an independent technical analyst. Views expressed are personal.)