After facing some heat this week, the benchmark Nifty 50 index seems to be approaching its support level of 17,250. In order to gauge the strength of the index, here’s a chart analysis of three of its highest-weighted constituents.
Reliance Industries Limited
Reliance Industries Ltd (NS:RELI) is the biggest company in India with a market capitalization of INR 15,52,507 crores and is the highest weighted constituent in the Nifty 50 index as well, with a weightage of 10.04%. After rebounding from a very strong support of INR 2,300 in early February 2023, the stock didn’t deliver a robust rally.
Image Description: Weekly chart of Reliance industries
Image Source: Investing.com
The up move fizzled out in a short span of time and the stock is again heading toward its support. As this demand zone has been keeping the stock from falling for a year now, if Reliance Industries’ shares break below INR 2300 - INR 2,290 this time then we might see a sharp fall of another INR 100 to INR 2,200.
HDFC Bank Limited
HDFC Bank Ltd (NS:HDBK) is the largest private-sector lender in the country with a market capitalization of INR 9,09,758 crores and holds a weightage of around 9.34% in the Nifty 50 index. The entire banking space is witnessing accelerated selling pressure amid the financial crisis of Silicon Vally Bank (SVB) in the US. Although SVB has nothing to do with banks in India, the sentimental effect is surely helping bears take charge.
Image Description: Weekly chart of HDFC Bank
Image Source: Investing.com
The collapse of SVB clearly shows what all banks are going through with their bond portfolios as central banks are going all guns blazing to increase interest rates. HDFC Bank has a support of around INR 1,560 which could easily be tested in the next few days. However, below this support, the stock could fall straight to INR 1,520.
Infosys Limited
Although ICICI Bank (NS:ICBK) is the third highest-weighted stock in Nifty 50, as I have already given the view on HDFC Bank, it would be more fruitful to look at a stock from a completely different sector. Infosys Ltd (NS:INFY) is an IT giant with a market capitalization of INR 6,12,518 crores and is the fourth highest-weighted index constituent with a weight of 6.92%.
Image Description: Weekly chart of Infosys
Image Source: Investing.com
The IT sector is also giving pain to investors, especially after the collapse of SVB which had high exposure to tech startups. But just like others on the list, Infosys is trading close to its support of INR 1,450 where the current fall could be curbed.
To conclude, most of the index heavyweights are trading very close to their support levels, just as Nifty 50. If they break these above-mentioned levels, then we might see a new low of the year in Nifty 50. Hence, keeping an eye on these 3 counters (combined weightage of 26.33%) would help you to frame your view on Nifty.
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