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

Indian equity benchmark indices settled sharply higher on Monday, with Nifty rally more than 390 points and settling merely shy of 24,600 mark. Following the strong positive reversal from the 23,600 levels last week, the Nifty has staged an impressive rally of nearly 1,000 points so far.

Decoding the market movement, Sahaj Agrawal, Head of Derivatives Research at Kotak Securities believes that the price action over the past four months has developed into an Ascending Triangle pattern, indicating a phase of healthy consolidation within the broader uptrend.

He sees the immediate hurdle for the bulls is placed in the 24,550–24,600 zone, which represents the upper boundary of this consolidation. A sustained move above this resistance is likely to confirm a fresh breakout, opening the door for an advance towards the 24,800–25,000 zone over the coming sessions.

"For tomorrow's expiry, the index has a high probability of testing the 24,750–24,800 range, while 24,400 is expected to act as a strong base on the downside," he said. In the derivatives segment, Open Interest continues to remain concentrated at the 24,600 Call and 24,500 Put strikes, indicating these as the immediate resistance and support levels, respectively."

To recall, the Nifty50 settled at 24,596.90, surging 390.70 points, or 1.60 per cent, on Monday. The Nifty Bank index zoomed 983.10 points, or 1.72 per cent, to end the session at 58,247.95, while the volatility gauge, India VIX, spiked as much as 1.45 per cent to 11.92 levels.

Agrawal from Kotak believes that the broader setup continues to favour further upside and traders may adopt a prudent approach by deploying a bull-call spread, which offers participation in the bullish move while keeping risk limited.  The analyst is expecting an upside up to 24,750-24,800 following the Ascending Triangle breakout.

He has suggested to buy a 24,600 call of Nifty and selling a 24,750 call option of Nifty, with expiry of August 4, which will result in an outflow of Rs 40. Stop Loss shall be entire premium, while one can expect targets of up to Rs 100-120 from this strategy.

For those traders, who want to participate in stock-specific action, Agrawal has suggest to buy PB Fintech Futures (Policy Bazaar) at Rs 1,622 with a target price of Rs 1,690 and a stop loss at Rs 1,580. Resistance trend-line breakout above the 1,620 level on the daily chart signals a positive technical setup with potential for further upside, he said.