Kotak Securities Offers Nifty Expiry Strategy
Ahead of Nifty's weekly expiry, Kotak Securities has provided a comprehensive trading strategy, highlighting critical support and resistance levels. Sahaj Agrawal, Head of Derivatives Research at Kotak Securities, suggests that the market is likely to remain within a defined range, favoring specific options strategies.
Key Support and Resistance Levels Identified
For today's expiry, immediate support for the Nifty index is placed within the 24,150–24,050 zone. Conversely, resistance is anticipated at 24,360, followed by a stronger resistance at 24,450. Agrawal noted that as long as the index maintains its position above the 24,050 support zone, the broader market structure is expected to remain constructive. A sustained move above 24,450, however, could signal a resumption of the prevailing uptrend.
Nifty's Recent Volatility and Consolidation
Indian equity benchmark indices closed lower on Monday, with the Nifty falling nearly 80 points to settle below the 24,300 mark at 24,287.65. The index has experienced volatility recently, declining almost a percent over the last week, though it has remained flat over the past month. Despite the fluctuations, the market has entered a consolidation phase within its broader uptrend, following a negative reversal from the 24,774 high. This gradual decline, occurring over 10 trading sessions, is seen as a healthy pullback, indicating the broader uptrend remains intact.
Derivatives Data Reinforces Trading Range
Analysis of derivatives data reveals heavy open interest concentration at the 24,500 call and 24,300 put strikes. This positioning reinforces a well-defined trading range leading into the expiry. Agrawal concluded that combined technical and derivatives data points to an effective range of 24,100–24,450 for today's expiry, with both extremes likely to hold on a closing basis.
Short Strangle Strategy Detailed
With the probability of a sharp directional move appearing limited, Kotak Securities advocates a short strangle strategy using far Out-of-the-Money (OTM) options. This approach allows traders to potentially benefit from Theta decay during the final session, provided the index stays within the anticipated range. Specifically, Agrawal suggests selling a 24,500 call option and simultaneously selling a 24,150 put option for the August 18 expiry. This strategy is expected to result in an inflow of Rs 16.55, with a recommended stop loss at Rs 33 and the entire premium as the target.
Stock Pick: Bharat Electronics Ltd (BEL)
For traders looking for stock-specific action, Agrawal recommends buying Bharat Electronics Ltd (BEL) futures for August at Rs 413. The target price for BEL futures is set at Rs 435, with a stop loss at Rs 399.
Disclaimer
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