Nifty trading strategy: How to trade Nifty after US bombs Iran? Rupak De shares his playbook

Edited excerpts from a chat:

Nifty has been struggling to move sustainably higher than the 25,000-mark for the last few weeks, as visible this time again. On the fundamental side, triggers are missing and the market is worried about Middle East tensions. Will 25,000 remain key support level?
For the past month or so, Nifty has been struggling to decisively move past the 25,000 mark. Although it managed to close above this level on multiple occasions, the lack of follow-up buying—mainly due to the volatile geopolitical situation—kept the index oscillating around 25,000.

Apart from being a psychological level, heavy Call writing also acted as a resistance, capping Nifty below 25,000.

Now, with Nifty closing 100 points above 25,000, Call writers are feeling the pressure. Sustained trade around this level could trigger short covering in Calls, potentially leading to a further rally. On the downside, 25,000 is now expected to act as the immediate support.

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Give us your trading strategy for Nifty monthly expiry next week. What are the levels to watch out for?
I believe Nifty will remain a ‘buy on dips’ as long as it stays above 24,850 (December 2024 high). Alternatively, aggressive traders may consider buying the 25,200 Call option above 110, targeting 180, with a stop-loss below 70.

With BSE and NSE swapping their expiry days with effect from September, how would your trading strategy change when it comes to index options?

With the expiry change, NSE option traders as well as intraday traders are likely to adjust their strategies. Monday will now act like the new Wednesday, as current weekly options will start losing value sharply from Monday itself. Tuesday, being the new expiry day, is expected to see heightened volatility—offering more opportunities for intraday traders.

For Nifty weekly option traders, the fastest time decay will now occur between Friday and Monday, due to the weekend effect. As a result, option sellers may find it more favorable to initiate short positions on Friday, depending on other market conditions. For me, it will provide more room to frame strategies involving short options on Friday.

For derivative traders, Thursday has been associated with Nifty expiry day for many years. Now with Sensex coming in on Thursday, how do you see trader interest evolving in Sensex contracts?
Going forward from September contract when new expiry-day shifting comes into effect, post-policy-day moves could be better captured through BSE options, since most policy announcements (like RBI meetings) typically occur mid-week—making BSE’s Thursday expiry more strategically aligned for such plays.

The broader market underperformed this week. Are the charts hinting at revival in small and midcaps?
Though midcap and smallcap stocks struggled during the week, the latest daily chart closing suggests a decent catch-up rally may be on the cards in the short term, with smaller companies likely to outperform their larger counterparts. Therefore, I expect a smart recovery in the mid and smallcap space in the coming days.

Waaree Energies surprised investors on Friday with a sharp 12% jump. How to trade the stock on Monday?
After a sharp rally, the risk-reward ratio no longer appears favorable for fresh entries. However, the overall sentiment remains strong, and a buy-on-dips approach would be a better way to enter the stock at the current juncture. Buying near 2,900 with a stop-loss below 2,800 seems like a more prudent strategy.

Give us your top ideas for the week ahead.

Buy INDUSTOWER @ 404.60 | TGT: 430 | SL: 389
The stock has moved up sharply following a period of sideways consolidation on the daily chart, indicating rising optimism. Moreover, the 21EMA and 50EMA have given a bullish crossover, supporting the positive view. The RSI is in a bullish crossover and rising. The current setup aligns well with a bullish outlook, with the price likely to rise towards 430. On the lower end, support is placed at 389.

Buy NAVA @ 565 | TGT: 600 | SL: 539
The stock has given a rounding bottom breakout on the daily chart, suggesting bullishness. In addition, the 21EMA and 50EMA have given a bullish crossover, reinforcing the positive view. The RSI is in a bullish crossover and rising on the hourly chart. The current setup supports a bullish outlook, with the price expected to move towards 600. On the lower end, support is placed at 539.

Buy CDSL @ 1680 | TGT: 1900 | SL: 1629
After a brief correction, the stock looks poised to rise again. The price found support at the 21EMA before moving higher, signalling positive sentiment. The RSI is in a bullish crossover and rising on the hourly chart, indicating early signs of strengthening momentum. The current setup supports a bullish view, with the price likely to move towards 1900. On the lower end, support is placed at 1629.