Technicals for week ending – 17th January 2016.

Nifty Weekly

The primary longer term trend still remains down for me as the Nifty index is below its 40 week moving average. On the weekly charts, the Nifty broke its support and closed below the blue shaded region. Similar pattern was seen on the Bank Nifty which has the highest weightage in the Nifty index. For a longer term bull trend would like to see these indices trading above their 40 week moving average and above the downward sloping trend-line.

The Nifty/Bond ratio deteriorated further this week and has been signalling that bonds would be a better performer since 2015. As per the ratio charts the weekly FMCG/Nifty ratio has started inching up and its 40 week moving average is also looking up – this is indicating a rotation towards the defensive FMCG names for relative outperformance.