Deploy short iron butterfly strategy in Nifty: Shubham Agarwal


Shubham Agarwal

Two consecutive weeks of consolidation as the Nifty gyrating between 17,800—17,000 facing major hurdle at 17,800. The Nifty shuts the shop with marginal loss of 1.14 percent around 17,330.

NBFC and IT sector contributed the most for this rise, Nifty witnessed short buildup on OI (open interest) front in the week gone by.

The Bank Nifty on the other hand behaved in tandem with nifty as it gyrated between 39250 to 37350 and ended the week with loss of around 400 points. Bank Nifty also witnessed Long unwinding on OI front in the week gone by.

Further diving into the Nifty upcoming Weekly expiry CE writers showing aggressions by building more position compared to PE writers.

Nifty immediate and vital support stands at the 17,000 levels where nearly 31 lakh shares has been added. On the higher side immediate resistance level is at 17,500 where nearly 39 lakh shares has been added followed by vital resistance at 18,000 with addition of 45 lakh shares.

Looking at the Bank Nifty upcoming weekly expiry data. On the upper side, Bank Nifty immediate resistance at 39,000 where nearly 15 lakh shares have been added followed by vital resistance stands at 40,000 where nearly 16 lakh shares has been added whereas, on the downside immediate support level stand at 38,000 where nearly 10 lakh has been added.

India VIX still trading on the upper regime. India VIX decreased marginally by 0.026% from 18.90 to 18.85 over the week. Spike in the India VIX has created a fear in the market. Further spikes in India VIX can lead to more fear.

Looking at the sentimental indicator, Nifty OI PCR for the week has increased from 0.90 to 1.10. Bank Nifty OIPCR over the week increased from 0.684 to 0.839 compared to last Friday. Overall data indicates more of PE writers over CE writers in Nifty.

Moving further to the weekly contribution of sectors to Nifty. Most of the sectoral indices have negatively contributed such as NBFC, IT and PVTB has collectively contributed nearly 180 in the Nifty 287 points loss. Whereas no other sector has contributed on the positive side.

Looking towards the top gainer & loser stocks of the week in the F&O segment. GNFC topped by gaining over 24.3 percent, followed by Indigo 14.2 percent, HPCL 6.7 percent. Whereas, Torrent Power has lost over 13.9 percent, Godrej Consumer Properties -10 percent, Tata Power 7.4 percent over the week.

Considering the consolidation along, upcoming week can be approach with a low-risk strategy like Short Iron Butterfly in the Nifty.



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