Nifty snapped three-day winning streak and formed bearish candle which resembles the Hanging Man pattern.
A Hanging Man is a bearish reversal candlestick pattern which is usually formed at the end of an uptrend or at the top. In a perfect Hanging Man pattern either there will be a small upper shadow or no upper shadow at all, a small body and long lower shadow.
Nifty opened higher at 14240 and hit an intraday record high of 14244 in early trade itself. Nifty remained volatile, but wiped out all gains and hit a day's low of 14039 in the afternoon. It recouped more than half of its losses in the last hour of trade and closed 53 points lower at 14146.
Nifty recouped half of its losses in last hour of trade and closed off day's low amid volatility and mixed Asian cues dented by FMCG and IT stocks.
A volatile session of trade today as the situation in EU tempered optimism with pivotal like RIL & ITC giving way. However, improvement in High-Frequency Indicators and the Impending Vaccination has ensured brisk FII flows into India even as other Emerging Markets witnessed outflows.
Market is experiencing volatility due to weak Asian market and profit booking owing to rich valuation. Banking stocks are supportive, led by good loan growth data for Q3FY21, announced by key private banks. In the near-term, trend of the broad market will depend a lot on FII inflows while stock specific actions will be based on Q3 result, which is about to pick up.
Nifty once again smartly recoiled from the intraday lows of 14039 level which depicted a Hanging Man formation on candlestick charts. Though this kind of formation is a warning sign for bulls in recent times it has failed on multiple occasions. Better confirmation of bearishness will occur only when the index breaches its near term critical support of 13950 level on a closing basis.
Expect the volatility to continue if the index fails to surpass today's record high of 14244 level in the coming sessions.
Hence, in the next trading session if bulls manage to push the index beyond 14244 level then the ongoing upswing shall expand towards 14450 level. In case bulls fail to get past 14244 level then the index may witness sideways consolidation between 14240/14000 level.
Traders to remain neutral in next trading session but if the index closes below 13950 level, then it shall provide an opportunity on the short side.