These stocks with ‘hanging man’ pattern may mean the party is over

by 5paisa Research Team Last Updated: 2022-06-29T15:45:30+05:30

The Indian stock market has been trying to build a bottom after sliding around 15% from the peak even as the monetary tightening moves by both the RBI and US Federal Reserve, besides continuing high prices of crude oil remain worrying factors.

But there are many stocks that are potentially in the overbought zone given their positions on the technical charts.

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.

We picked a metric called ‘hanging man’, a candlestick pattern that is indicative of a bearish reversal pattern that signals that the uptrend is going to end.

It also indicates that the bulls have lost their strength in pushing the stock price up and bears are back in the market signalling weakness in further price movement.

Using this metric, we get a long string of hundreds of small and micro-cap stocks including penny stocks that meet the criteria. In addition, there are half a dozen Nifty 500 companies that are also showing the pattern.

At the top of the heap is cement major UltraTech, NMDC, Sundaram Finance, Shriram City Union Finance, GR Infraprojects and Caplin Point Labs.

If we filter small caps with a market cap of over Rs 500 crore with the same pattern, we get a list of two dozen names.

These include Hawkins Cookers, Steel Strips Wheels, Pilani Investment, Hester Biosciences, Yasho Industries, Punjab Chemicals, Gokul Agro Resources, Xpro India, Ganesha Ecosphere, Steel Exchange India, Nahar Spinning Mills, WPIL, Lloyds Steels, Shanti Educational and Jyoti Structures.

Others in the pack are Ritesh Properties, Quint Digital Media, Bigbloc Construction, Mangalam Cement, Raghuvir Synthetics, White Organic Retail, Ruby Mills, Gujarat Themis and Gloster.

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