The Nifty 50's P/E read against the 10-year government bond yield, cross-checked with a Dow-Theory view of the weekly trend. Together they say whether a breakout is worth buying — and whether a breakdown is worth selling.
The bands. We turn the 10-year bond yield into a "risk-free P/E" (100 ÷ yield). If the Nifty's P/E is near or below that, equities are priced like a near risk-free return — the deep-value zone. Each band above is five P/E points wide: low, mid, then high.
The Dow signal. On the weekly chart we mark the last significant top and bottom (a ~4% move held over about a month). A confirmed break above the top is a buy signal — but only worth acting on if valuation is low; in the high band it's momentum without value, so no buy. A confirmed break below the bottom is an exit signal only when valuation is rich; when the market is cheap, weakness isn't a reason to sell.
The significant top and bottom levels are read from the weekly Nifty chart by our analyst and updated regularly.