Technicals for week ending – 11th October 2015.

Nifty weekly

Looking at the weekly charts, we are near the 8200 hurdle and things get very interesting here : 1^st we have a downtrend line from the all-time highs till the August highs, this also coincides with the 40 week moving average. So this zone is going to be real tough to get past through I believe. Also, there is a similar structure on the Bank-Nifty and banks have the largest weightage in the Nifty. From a longer term trend perspective we are still not out of the woods.

The weekly Nifty/bond ratio is still far below its 40 week MA which indicates a more positive outlook for bonds vis-à-vis Nifty.

On the earnings front we are back at the 100% zone for the Nifty-earnings indexed spread and the nifty PE ratio is back above its + 1 SD.

A break above the downtrend lines plus an improvement in earnings would be the best scenario for the longer term picture. Till then it’s better to sit on the side-lines or reduce exposure here.