Deploy Modified Call Butterfly strategy in Nifty this week: Shubham Agarwal


To sump up the week gone by, there were two consecutive expiries of consolidation where Nifty traded in broader range of 18,200-17,650. Another struggle for Nifty to surpass 18,200-mark with a strong push on Friday.

A decisive breakout above 18,200 will take Nifty to 18,500-18,600. Nifty has witnessed long built-up over the week.

Meanwhile, Bank Nifty fell around 2 percent last week, closed around 38,860. Bank Nifty over the week traded between 39,750 and 38,150. On the OI (open interest) front, long unwinding was witnessed in the Bank Nifty over the week gone by.

Further, diving into the Nifty’s upcoming weekly expiry, Put writers are showing aggression by building more position compared to Call writers.

Nifty’s immediate and vital resistance stands at 18,500, followed by 19,000 with addition of 29 lakh shares. On the lower side, immediate support level is at 17,500 where nearly 55 lakh shares were added, followed by 17,000 with addition of 32 lakh shares.

Looking at the Bank Nifty’s upcoming weekly expiry data, on the upper side, immediate resistance stands at 39,000 (14 lakh shares) followed by 39,500 (12 lakh shares). Whereas, on the downside, 38,500 (11 lakh shares) stand at the immediate support level and followed by 38,000 (9 lakh shares) as the vital support level.

India VIX, fear gauge, decreased marginally by 3.60 percent from 15.75 to 15.18 over the week. India VIX is trading near the lowest level of pre-covid crash.

Cool-off in the IV has given relaxation to market. Further, any downtick in India VIX can push the momentum upwards in Nifty.

Looking at the sentimental indicator, Nifty OI PCR for the week has increased from 1.076 to 1.158. Bank Nifty OIPCR over the week decreased from 0.737 to 0.701 compared to last Friday. Overall data indicates more of put writers over put writers in Nifty.

Moving further to the weekly contribution of sectors to Nifty. Most of the sectoral indices have contributed positively such as IT, OIL, and NBFC has collectively contributed nearly +250 in the Nifty 294 points gain. Whereas PVTB and PSUB collectively contributed nearly +60 points on the negative side.

Looking towards the top gainer & loser stocks of the month in the F&O segment, Adani Enterprises topped by gaining over 14.8%, followed by Muthoot Finance 11.6%, BEL 11.3%. Whereas, IndusInd Bank has lost over 12.1%, FSL -11.00 %, BHEL -9.10% over the week.

Considering the bullish momentum, the upcoming week can be approached with a low-risk strategy like modified call butterfly in Nifty.



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