Nifty formed a Hammer pattern on the daily chart and a Spinning Top on the weekly chart. It corrected seven-tenth of a percent during the week.
After opening higher at 15756, Nifty hit an intraday high of 15761 but wiped out the gains in the initial half hour of the trade and hit the day's low of 15450 in late morning. A gradual recovery followed and index recovered 232 points to close only 8 points lower at 15683.
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.
Spinning Top formation is often regarded as a neutral pattern that suggests indecisiveness in the market. It can be formed in an uptrend as well as in a downtrend.
Nifty managed to recover more than 200 points in the afternoon trade to close with moderate losses, driven by private banking & financials and index heavyweights.
USDINR spot is at an inflection point, though optimism over Fed rate hikes is keeping the USDINR afloat, the price activity suggest that revaluation of positioning is currently taking place. Today’s weekly closing will be important for more clear direction for USDINR in coming days.
After opening the session on a positive note, Indian markets pared all the opening gains and came under strong selling pressure. Sell off was seen across sectors, with metal stocks being one of the worst hit. Hints from the Federal Reserve that it could hike interest rates from 2023 have put world markets and commodities under stress, while the dollar has strengthened sharply. With global risk sentiment deteriorating, further selling in the short-term cannot be ruled out as markets price-in the Fed's surprising shift in policy stance.
Nifty smartly recoiled from the initial support point placed around 15450 level, which resulted in Hammer kind of formation on daily chart, whereas weekly chart registered an indecisive candle, which resembles a Spinning Top.
Despite the intraday recovery, advance decline ratio decisively skewed in favour of the bears as almost two stocks declined for every single stock, which closed in positive terrain, hinting that correction set in some kind of panic in the broader markets.
Unless the Nifty see a sustainable close above 15769, it will remain vulnerable to a sell off.
If Nifty sustains above 15769 on a closing basis, the trend may remain sideways in the 15900/15600 zone at least on closing basis. The level of 15450 assumes importance as a critical support, below which weakness will resume with a bigger damage to the index.
Considering the intraday volatility, Traders should remain neutral for the next session before initiating index trade.
Sector Wise :- Except FMCG, all other indices ended in the red with energy and PSU bank indices shed 1/2 percent.