In June, the Nifty 50 index posted a 3% rally and is now just a few percentage points away from reaching an all-time high. While the banking and IT sectors have been at the forefront of this surge, traders know that sector rotation is a key strategy for staying ahead.
With the current momentum, it appears that the Fast-Moving Consumer Goods (FMCG) sector is potentially poised to take centre stage this month, showcasing strong potential on the charts.
The week kicked off with impressive bullish momentum for FMCG stocks, as the Nifty FMCG index surged by 1.68% on Monday.
The daily chart of the index is on the verge of breaking out of a falling channel pattern. The breakout level to watch is placed at 56,100, which would also confirm the index moving above its 200-Day Exponential Moving Average (EMA) of 55,905, a key technical indicator.
Additionally, a bullish crossover on the MACD (Moving Average Convergence Divergence) suggests that the bulls are firmly in control, and there is potential for the index to push past the 56,100 mark, leading to a potential extended bullish run.
Two stocks that are potentially beneficial for a bullish move on the breakout of the Nifty FMCG index
On the daily chart, the Dabur share price broke out of a falling channel pattern to the north. The falling channel forms the lower high – lower low and the breakout from the channel confirms an end to the lower highs and lower lows pattern signaling a bullish reversal.
Adding to the channel breakout, the stock is trading above its long-term moving average – 200DEMA, which further strengthens the potential bullish trend.
On the indicator panel, the bullish crossover on the MACD strengthens the chart structure and the stock price could potentially head north.
2. Marico
Marico’s stock price hit an all-time high of Rs 744 last week, indicating the bulls are in control of the trend. The bullish trend as per Dow Theory with the structure of higher highs – higher lows confirms an uptrend . The consolidation above the previous highs suggests a brief pause before the resumption of the uptrend.
If the stock closes above Rs 750, it could confirm the resumption of the bullish momentum, taking the stock price into uncharted territory to the new all-time high.
Furthermore, the bullish crossover on the MACD confirms that the stock is in a bullish trend, with potential for new trend.
A Potentially Promising July for FMCG
Sector rotation becomes increasingly important for traders when markets are trending around the highs. The FMCG sector, with its potential bullish setup, appears to be an outperformer in July. Both Dabur and Marico should be on your watchlist as the potential breakout patterns and supportive indicators, such as the MACD crossover, are highlighted on the chart.
Disclaimer:
Note: The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
As per SEBI guidelines, the writer and his dependents may or may not hold the stocks/commodities/cryptos/any other assets discussed here. However, clients of Jainam Broking Limited may or may not own these securities.
Kiran Jani has over 15 years of experience as a trader and technical analyst in India’s financial markets. He is a well-known face on the business channels as Market Experts and has worked with Asit C Mehta, Kotak Commodities, and Axis Securities. Presently, he is Head of the Technical and Derivative Research Desk at Jainam Broking Limited.