Business Standard

Profit booking on cards for Nifty Pharma, FMCG; check trading strategy

The Nifty Pharma Index is currently showing a bullish trend on the near-term charts but is approaching a significant resistance level around 20,850

share market

SI Reporter New Delhi

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Nifty Pharma Index Analysis

The Nifty Pharma Index is currently showing a bullish trend on the near-term charts but is approaching a significant resistance level around 20,850. Technical indicators are in the overbought zone, which suggests that profit booking and selling pressure are likely to occur in the coming days.

Given this scenario, the best trading strategy would be to book profits and remain in cash until the index reaches its support levels, which are identified at 20,200, 20,000, and 19,800. This cautious approach helps traders lock in gains and avoid potential downturns.

Buying should only be considered when the index is available at or near the support levels mentioned above.This strategy allows traders to capitalize on the anticipated pullback, ensuring they enter positions at a more favorable risk-reward ratio.

By waiting for the index to reach these support levels, traders can better position themselves for potential upward movements once the pullback phase concludes.This method not only preserves capital during potential downswings but also prepares traders to take advantage of the next bullish phase at more advantageous prices.

Nifty FMCG Index Analysis

The Nifty FMCG Index is currently displaying a bullish trend on the charts. However, resistance is anticipated around the 60,000 level. Given the sharp rally in the near term, profit booking is likely to occur in the coming days. Support levels are expected at 58,350 and 58,000, making it advisable to wait for these levels before making fresh investments.

In the near term, stiff resistance is projected within the 60,000 - 60,200 range. Therefore, the best trading strategy would be to book profits at the current levels and wait for a pullback to the mentioned support levels before re-entering. This approach helps to avoid potential downturns and ensures investments are made at more favorable levels, maximizing the potential for gains when the market stabilizes.

Investors and traders should remain vigilant and monitor the key levels mentioned. In both indices, the overbought conditions and upcoming resistance levels suggest a period of consolidation or correction.

By adopting a disciplined approach to profit booking and waiting for more favorable entry points, market participants can optimize their investment outcomes and manage risk more effectively. This strategy not only protects against short-term volatility but also positions investors to benefit from subsequent market recoveries.

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(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.)

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First Published: Jul 11 2024 | 6:27 AM IST

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