Ahead of today's Nifty weekly expiry, the Indian equity market shows a degree of apprehension, particularly following the implementation of the new CAS mechanism for closing price determination. While the Nifty50 posted mild gains on Monday, settling just shy of the 24,600 mark, it has remained largely flat over the past week, declining 0.06 percent after an impressive rally in late July. The market has been confined to a narrow range, with broader participation subdued across most sectors.
Nifty Market Outlook and Key Levels
Sahaj Agrawal, Head of Derivatives Research at Kotak Securities, views the recent price congestion between 24,700 and 24,500 as a consolidation within a broader uptrend, not a reversal. He anticipates a potential volatility expansion around this weekly expiry or in the immediate sessions.
Agrawal suggests that a decisive breakout and sustained move above the 24,700 resistance zone could trigger fresh upward momentum, potentially pushing the Nifty towards the 25,000–25,200 range. Conversely, a breach of the 24,490 support level would signal caution and could weaken the prevailing bullish structure.
On Monday, the Nifty50 closed at 24,583.80, up 13.15 points (0.05%), while the Nifty Bank shed 59.50 points (0.10%) to finish at 57,686.95. The India VIX, a volatility gauge, rose almost one cent to 12.24 levels, marking over a 2% increase in a week.
Kotak's Trading Strategy and Top Pick
In the derivatives segment, open interest (OI) remains concentrated at the 24,600 strike for both calls and puts, indicating its significance as a near-term inflection point. Kotak's analyst maintains that the broader setup favors further upside.
For traders, Agrawal recommends initiating a bullish strategy upon a confirmed breach above 24,700 resistance by deploying a bull call spread. This strategy offers participation in an upside breakout while limiting downside risk, following an Ascending Triangle Breakout pattern with a potential for upside to 24,750-24,800.
- Strategy: Buy 24,600 call of Nifty and sell 24,800 call option of Nifty (August 11 expiry).
- Outflow: Approximately Rs 55.
- Stop Loss: Entire premium paid.
- Target: Rs 120-150 from this strategy.
For those seeking stock-specific action, Agrawal suggests buying Titan Company Futures of August at Rs 5,108.5. The target price is set at Rs 5,375, with a stop loss at Rs 4,930. This recommendation is based on a resistance trend-line breakout on the daily chart, signaling a positive technical setup with potential for further upside.
Disclaimer: This information is for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.