#NIFTY Weekend view on the 7th of May.

On last Thursday we saw clear sign of strength. Hence Friday’s move was indeed quite unexpected. We saw a widespread down bar on high volume closing at the low. The volume was about 15% lower than the previous day. The index closed below the last acceptable price levels of 9306. Overall, technically it was clear sign of weakness.  So the question that arises is whether the weakness would continue, increase and take the index down a lot.

Generally when we are analyzing the Index in terms of VSA we look at it in isolation as if it is a stock. However when we see a totally unexpected move, it always pays to probe a little deeper by looking at the components. We need to see if the weakness was across the board or if it was confined to some individual stories.  Fridays’s weakness was not really across the board and major weakness was confined to some select sectors. Major sell off was seen in the PSU banking sector.  Just Bank of Baroda and SBI contributed to nearly 25% of the volume. Next were the Metals stocks Hindalco and Tata steel which contributed another 10%. Just four stocks contributing to nearly 35% of the Volume. Hence we can say with some level of confidence that the weakness seen on Friday is not as pronounced as it seems. Indeed we may see a little more down side and some more consolidation before seeking higher sides again. 9220 could give the required support.