Bearish Marubozu Candle on Nifty chart- Time to be cautious

Global stocks took a sharp u-turn from uptrend after prices butchered on the back of UK tightening lock down to prevent the spread of corona virus. Stock markets around the world took this as blockage to economical recovery and resulted in dumping of equity stocks.

Indian markets have also felt heat with both Nifty and Sensex falling more than 3%. All the sector closed with deep losses resulting in erosion of lot of wealth of investors. The worst thing is the formation of Bearish Marubozu candle on Nifty chart which suggest that more pain ahead. This pattern is seen as negative and result in further selling pressure. The bulls can again take charge once the Nifty reclaims today’s high at 13777. Have a look on Nifty chart.

What damage this candle has done? 
Today Nifty has broken an important 13380 to 13415 level which was earlier acting as support level can act as resistance in near future. To move higher Nifty has to break this level and need to close above this level to resume uptrend.  

As long as Nifty trades 12700 to 13100 the overall trend is positive and bulls will remain in charge. Today move is just a sign of cautiousness and investor should get ready for increment of volatility in near future.

What step one can take to safeguard his portfolio?

There are two ways to hedge your portfolio, one you can use protective put to safeguard your portfolio and another simply buying gold through ETFs to hedge portfolio available in your Dmat account.

  • Gold can be good hedge as new stimulus package in US can enhance the probability of higher price of gold as it is used to hedge the inflation.
  • Protective puts can safeguard your portfolio by hedging the portfolio.
We strongly recommend you to read Protective put article Click here to understand the concept

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