Trade Setup – Nifty

Always remember, when there is too much consensus, market surprises!
That is what has happened last 2-3 days when NIFTY has corrected beyond the comprehension of everyone and stands today at 9750 level. Many now are seeing it going down on weakness. There are people who are saying that it’s a sell on rally market rather than buy on dips. This is where I think the turnaround is happening. NIFTY taking support at 9750 and closing above is a positive sign indeed.
What to do now? Today NIFTY will open at 9780 levels and if you haven’t taken a long position, it’s better to buy NIFTY at any point between 9750 and 9800 and look for a target of 9850 to 9880. This is an opportunity presented and there are reasons why I say that.
First, the put call ratio has fallen from 1.12 to 1.04 which is lowest in almost 2 months. That means lots of short calls have accumulated in the system and any upward movement means these calls will be covered.
Second is buying that happened in NIFTY futures yesterday itself by FIIs. If they are not bullish they wouldn’t buy Futures. That is a definite sign of things looking up in near term.
Third, FIIs sold a lot in August so far and the sell figure stands at 11,700 Crore. That would mean DIIs and retail investors if they can turn buyers this market will go up. NIFTY has 47% shorts and that is good enough to trigger a rally.
All these indicate a positive movement for today. This will be a technical rally, unless some serious fundamentals interfere