Nifty formed a Hammer kind candle on the daily chart with a long lower shadow indicating declines were being bought in.
Hammer is a bullish reversal pattern formed after a decline. It consists of no upper shadow, a small body, and a long lower shadow. The long lower shadow signifies the stock bounced back after testing its support, where demand is located.
Nifty opened flat at 15761 and turned lower to hit an intraday low of 15513 in morning trade. Nifty showed recovery from late morning deals but remained in the red throughout session to close 37 points at 15709.
Nifty managed to recoup some losses in later part of session but overall remained in favour of bears, as banks, auto, and select pharma stocks witnessed selling pressure.
Markets remained volatile today but interesting thing to note is that despite acute turmoil in Chinese stock markets, we stood our ground well. This shows huge buying interest from investors waiting on the sidelines for a correction. PSU banks are delivering good results refereeing Canara Bank and UCO Bank numbers. Looking at overall IPO markets, especially the forthcoming ones, I think a huge correction is unlikely in the medium term.
It appears to be the day of roller coaster ride for the Indian bourses as the Nifty witnessed swift recovery, from the intraday low of 15513, after the sharp fall from the intraday high of 15767 in the early session of the day which resulted in Hammer kind of formation. Despite this recovery advance decline ratio decisively remained skewed in favour of bears.
Index has not significantly improved indicator/oscillator set up in favour of bulls. Hence, it can be safe to assume that Nifty is still stuck up in a trading range with upsides capped around 15916 level.
Nevertheless it is essential for the index to sustain above its 50 day moving average, whose value is placed around 15660 level, as if the index breaches that level on closing basis then it can be sentimental negative for bulls.
In next session if Nifty manages to sustain above 15789 level then some intraday strength can be expected but monthly expiry related factors may bring back volatility to the index.
Traders to remain neutral whereas if the index closes below 15600 then it can once again catapult the trend in favour of bears.
Sector Wise :- Metal index added over 1 percent and IT index rose 0.2 percent, however, selling was seen in the auto, bank, energy and pharma sectors.