how to HLS(Http Live Strem) with Nginx
The ngx_http_hls_module, which is available with a commercial subscription, provides HLS support for MP4 and MOV files. You already seem to have a HLS stream available so you don't need to pass trough this module at all. Just output your segments/playlist directly into a web accessible directory.
Concerning the shown error, it's most likely due to an error in the configuration file somewhere before your location directive. Check the entire config file.