Kotak Securities has offered a strategic outlook for the Nifty's upcoming weekly expiry, anticipating a period of consolidation. Sahaj Agrawal, Head of Derivatives Research at Kotak Securities, suggests implementing a short strangle strategy to navigate the market dynamics.
Nifty Market Outlook and Key Levels
Indian benchmark indices have recently shown a strong recovery, buoyed by easing geopolitical tensions and stable crude oil prices around $72 per barrel. Despite this positive momentum, Agrawal notes that the market appears overbought, with hourly oscillators entering overstretched territory and the Put-Call Ratio (PCR) climbing to approximately 1.48.
"Following a positive reversal from the 23,830 zone last week, Nifty has extended its recovery towards the 24,450 mark," Agrawal stated. However, he cautioned that the pace of the recent rally could moderate, leading to consolidation.
For the weekly expiry, immediate resistance is identified in the 24,550–24,850 zone. This area aligns with a significant volume cluster and is expected to act as an overhead supply barrier. On the downside, immediate support is projected between 24,200 and 24,050, with the crucial 23,830 level serving as a stronger base. Agrawal emphasized that a breach of 24,200 would be necessary for any significant downside movement.
On Monday, the Nifty50 closed at 24,430.35, gaining 159.50 points (0.66%). The Nifty Bank index also rose by 353 points (0.61%) to 58,291.50, while the India VIX saw a marginal increase of 0.15% to 11.82.
Recommended Short Strangle Strategy
Based on the combined technical and derivatives data, which suggests a trading range of 24,200–24,600 for the current expiry, Kotak Securities recommends a specific short strangle strategy for the July 07 monthly expiry of the July series:
- Sell: Nifty 24,600 Call option
- Sell: Nifty 24,100 Put option
This strategy is expected to generate an inflow of Rs 15.5. Agrawal advises a strict stop-loss of Rs 31, with the target being the entire premium collected.
Disclaimer: This information is for educational purposes only and should not be considered investment advice. Consult a qualified financial advisor before making any investment decisions.