I have some bunch of points in an area and I want to draw connecting lines with the help of points to create a closed polygon. But all these needs manual efforts. Can any one explain to me how to create polygon automatically in QGIS with the help of outermost points.
You are looking for an automatic method for drawing connecting lines with the help of points to create a closed polygon. You are tagged this question with qgis-processing but convex hull, as suggested in a comment by @s.k, doesn't look as a good option because there are points not considered in final produced layer (I tested it). Concave hull (k-nearest neighbor) is a better option but some points can also be excluded in final product.
I suggest a semi automated approach with QGIS (completely automated requires Python) were you manually select contour points (in a clockwise sense) to be converted in a line and afterward in polygon. I tested my approach by digitizing such points in a new point layer (in your case you will use your original point layer and snapping options) from your image projected arbitrarily in EPSG:32612. It looks as follows (with only 18 points, as blue stars, digitized):
Afterward, I ran 'Points to path' processing tool for getting following result:
Finally, 'Lines to polygons' processing tool produces a desired result with Paths as input layer:
