Authors : Dr. S Mobasheer

Volume/Issue : Volume 10 - 2025, Issue 6 - June

Google Scholar : https://tinyurl.com/4turextr

DOI : https://doi.org/10.38124/ijisrt/25jun974

Note : A published paper may take 4-5 working days from the publication date to appear in PlumX Metrics, Semantic Scholar, and ResearchGate.

Abstract : This study tests the statistical validity of the bullish-engulfing candlestick pattern in India’s large-cap universe. Drawing on daily price data for five highly liquid Nifty-50 constituent Infosys, HDFC Bank, Hindustan Unilever, Reliance Industries, and Tata Consultancy Services. we identify every bullish-engulfing event from January 2017 to December 2023. An event study framework measures abnormal performance over 1 day and 5 day horizons, while Welch’s unequal variance t test evaluates whether signal day returns differ significantly from unconditional benchmarks. Across the sample only 6 to 14 engulfing events appear per stock, underscoring the pattern’s rarity in liquid equities. Aggregate results show next day win rates ranging from 16 percent of Infosys to 75 percent of Reliance and five-day win rates from 43 percent of HDFC Bank to 71 percent Hindustan Unilever. Yet no p value falls below the 0.05 threshold, the best-in-class readings The probability value is approximately equal to 0.10 for Reliance 1 day and The probability value is approximately equal to 0.09 for Hindustan Unilever 5 day remain suggestive rather than conclusive. Risk reward analysis means five-day return divided by standard deviation is positive for only one stock, indicating that volatility often outweighs expected gain. Visual inspection confirms most engulfing candles occur mid-range rather than at capitulation lows, limiting follow-through. These findings align with recent literature questioning single candle efficacy in well arbitraged markets. We conclude that, in isolation, a bullish-engulfing signal offers no reliable edge in India’s large cap segment. Future research should expand the panel, incorporate trend volume filters, and account for transaction costs to determine whether contextual factors can unlock persistent predictive value.

Keywords : Bullish Engulfing; Candlestick Patterns; Technical Analysis; Indian Stock Market (Nse/Bse); Statistical Significance; Trading Strategy Performance; Risk-Reward Metrics; Pattern Accuracy.

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