These 17 stocks have formed a ‘hammer’ with a bullish reversal signal


by 5paisa Research Team Last Updated: Jun 14, 2022, 01:16 PM IST

The Indian stock market has slumped so far this week, but is also witnessing some pullback. On the one hand, the spectre of higher-than-expected interest rate hikes by the US Federal Reserve and the RBI is playing out in the mind of investors. On the other hand, high oil prices due to the Russia-Ukraine war has meant companies at large face cost pressures.

Investors looking at charts and price and volume patterns have various parameters to decide whether a stock is ripe for the pick or is showing signals of weakness and is best left untouched.

One such parameter is the ‘Hammer’ price pattern in candlestick charts. This happens when a stock trades significantly lower than its opening, but moves up to close near the opening price. In this hammer-shaped candlestick, the lower shadow is at least twice the size of the real body.

The candlestick body is derived from the opening and closing prices, while the shadow captures the high and low prices for the period.

These patterns emerge after a price decline with buyers absorbing the selling pressure and push up the market price back around the opening price.

Hammer candlesticks can be seen as a potential signal for upward price reversal.

If we look at the Nifty 500 pack, we get a list of 17 stocks that are showing a hammer pattern after the market mayhem this week.

Among these, the large cap group with a market valuation upwards of Rs 20,000 crore has names like hospital chain operator Max Healthcare Institute, pipe maker Astral, state-owned Steel Authority of India, insurance company Max Financial Services, public sector lender Union Bank of India, and cement producer Dalmia Bharat.

Other large caps in the list are 3M India, Supreme Industries and Bata India.

Lower down the order, we get AIA Engineering, Indian Bank, Clean Science & Tech, City Union Bank and Borosil Renewables among those with a market cap exceeding $1 billion, or about Rs 7,800 crore.

Further down, in the small-cap space, three companies are part of the group: JK Lakshmi Cement, Aarti Drugs and Karur Vysya Bank.

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