Nifty weekly expiry today: Kotak suggests top pick & trading strategy; key levels to watch

Indian equity benchmark indices posted mild gains on Monday, with Nifty adding only little more than 13 points and settling shy of 24,600 mark. The Nifty has staged an impressive rally in the last week of July, but has remained largely flat in the last one week, declined 0.06 per cent. The market range has remained narrow.

Market reflects a degree of apprehension following the implementation of the new CAS mechanism for closing price determination. The Nifty50 remained largely confined to the 24,490–24,700 band for the rest of the week. With broader market participation remaining subdued, most sectors ended broadly flat on a weekly basis, said Sahaj Agrawal, Head of Derivatives Research at Kotak Securities.

"The recent price congestion, broadly formed between 24,700 and 24,500, should be viewed as a consolidation within the broader uptrend, rather than a reversal in the prevailing trend. This consolidation has already extended for more than six trading sessions, and a volatility expansion could emerge around this weekly expiry or in the sessions immediately ahead," he said.

Agrawal sees a decisive breakout and sustained move above the 24,700 resistance zone is likely to trigger fresh momentum on the upside, potentially opening the way for an advance towards the 25,000–25,200 zone over the coming sessions. Conversely, a breach of the 24,490 support would warrant caution and could weaken the prevailing bullish structure, he said.

To recall, the Nifty50 settled at 24,583.80, rising only 13.15 points, or 0.05 per cent, on Monday. The Nifty Bank, however, shed 59.50 points, or 0.10 per cent, to end the session at 57,686.95, while the volatility gauge, India VIX, rose nearly a  cent to 12.24 levels, rising more than 2 per cent in a week.

In the derivatives segment, open interest (OI) remains concentrated at the 24,600 strike in both calls and puts, highlighting the significance of the current level as a potential near-term inflection point, said Kotak's analyst. "The broader setup continues to favour further upside, traders may initiate a bullish strategy upon a breach above 24,700 resistances by deploying a bull call spread."

He has suggested a which offer  participation upon a upside breakout confirmation while keeping the downside risk limited, following Ascending Triangle Breakout, which has a potential for upside to 24,750-24,800.

He advocated to buy a 24,600 call of Nifty and selling a 24,800 call option of Nifty, with expiry of August 11, which will result in an outflow of Rs 55. Stop Loss shall be entire premium, while one can expect targets of up to Rs 120-150 from this strategy.

For those traders, who want to participate in stock-specific action, Agrawal has suggest to buy Titan Company Futures of August at Rs 5,108.5 with a target price of Rs 5,375 and a stop loss at Rs 4,930. Resistance trend-line breakout on the daily chart signals a positive technical setup with potential for further upside, he said.