Nifty Call: Buy in dips with a stop-loss at 10,890

Nifty 50 October Futures (10,913)

Bellwether indices - the Sensex and the Nifty -- started the session on a negative note and broadly continued to trade in the negative territory. However, the indices currently witness buying interest at lower levels and are on a recovery mode.

The Sensex is likely to enter the positive territory. The volatility index, India VIX, tumbled 7 per cent to 18.19 levels. While the Nifty Realty and Nifty PVT Bank indices witnessed selling pressure and slumped 2.7 per cent and 1.2 per cent respectively, the Nifty IT and Nifty PSU Bank indices gained 2.6 per cent and 1.4 per cent, correspondingly on the back of buying interest.

Nifty October month futures contract began the session in the negative zone at 10,931. After an initial rally to an intra-day high of 10,970, the contract started to decline.

However, it found support at an intra-day low of 10,857 and began to recover. While trending up, the contract has breached key resistance at 10,875 and 10,900.

Taking a contrarian stance, the near-term recovery can extend the contract rally. Traders with a short-term perspective can make use of intra-day dips to buy the contract while maintaining a fixed stop-loss at 10,890.

A strong rally beyond 10,950 can take the contract higher to 10,970 and 11,000 in the near term. Key supports below 10,900 are placed at 10,874 and 10,855 levels. Vital resistances above 11,000 are at 11,030 and 11,050 levels.

Strategy : Buy in dips with a stop-loss at 10,890.

Supports : 10,900 and 10,875

Resistances: 10,950 and 10,970

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