Nifty formed a small-bodied bullish candle on the daily chart with a long lower shadow indicating declines are being bought in the market.
A Hanging Man is a bearish reversal candlestick pattern 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 flat at 15791 and fell sharply to hit the day's low of 15606. In initial half an hour of the trade, Index started recovering to gain in the last hour of trade. Nifty closed at 15811, up 12 points.
Nifty remained volatile and fell nearly 200 points during the day following a sell off in Adani group company stocks but the index turned positive in the last hour to close at another record high.
Shares of Adani group companies took a beating on reports of the National Securities Depository Ltd (NSDL) freezing three Foreign Portfolio Investors' accounts that own shares in four of the listed Adani firms emerged. Later in the day, the group said the reports were erroneous and the accounts had not been frozen. NSDL data, however, showed that the accounts were indeed frozen.
Nifty made a dramatic recovery from intraday lows of 15606 level, which resulted in a Hanging Man kind of indecisive formation with long lower shadow. Despite this recovery of around 200 points, bullish sentiment failed to spread in the broader markets as advance decline ratio remained skewed in favour of bears.
Moreover, considering overall technical picture across the time frames, upsides from current level appear to be limited and by virtue of that fact Nifty shall ideally carve out a trading range between 15850/15600 level for several days going forward.
It would be prudent for index traders to create fresh longs on dip, preferably at lower end of the trading range rather than chasing the index at current level.
On the downside, weakness shall get confirmed on a close below 15600, which may trigger a sharp correction in the index.
Considering the volatility, Traders should wait for more cues before initiating directional trade in the index.
Sector Wise :- Buying was seen in IT, energy and PSU banks, while metal, auto and banking names witnessed selling pressure. Midcap and Smallcap ended in the red.