Nifty 50 continued to experience weakness as it followed global equity markets which are experiencing selling pressure. Last week Nifty lost around 3.83% mainly due to heavy selling experienced in metal and banking stocks. Among the metal heavyweights, Tata Steel and JSW Steel were the worst performers losing 14.54% and 13.03% over the week. Similarly in the banking segment, SBI lost 8.12% and ICIC Bank lost 5.83% over the week. Continued selling by FII’s as liquidity fears creep in, due to the increase in US’s interest rates and continuing war between Ukraine and Russia is adding to the worries of the investors. Considering the fundamental (economic/geopolitical) factors we expect the weakness to continue in the forthcoming weeks.
Technically, the Nifty has been in a weak phase since last month. The trendline shows the index forming lower-high and lower-lows indicating selling pressure is being experienced. Nifty’s movement the previous week to a great extent was in line with our volume-based analysis (check it out). Last week’s fall was accompanied by heavy volume but Friday’s (May 13th) closing happened at a significant demand zone and an upside rally from present levels may not be ruled out. Any confirmatory breakout (breakout with considerable volume) of the present demand zone (15750-740) may initiate another bear rally towards 15000-14850. On the other hand, a recovery from the preset level (highly probable) may be slow & steady and pull the index towards its first supply zone of 16260-280.
The volume-trend indicator (TWV’s proprietary indicator) is showing prevailing weakness and only an upside breach of the trendline will confirm a change of trend.