Deploy Modified Call Butterfly strategy in Nifty: Shubham Agarwal


Shubham Agarwal

After a good upside rally from the lows of 15,700, the Nifty took a pause and shuts the shop around 17,500. The Nifty future during this week ranged from 17,830 to 17,480.

The Nifty consolidating on a broader range of 18,600-16,800. On the OI (Open Interest) front, short buildup witnessed in the Nifty over the week gone as there is a jump in OI by more than 6 percent.

On the other hand, Bank Nifty outperformed the Nifty as it closed week on a marginal loss of 1 percent and closed around 37,500. The Bank Nifty future gyrated between 38,000 and 37,400 the last week. Overall, the Bank Nifty ended the week with a loss of around 440 points. It also witnessed a short buildup on the OI front in the week gone by.

Further diving into the Nifty, the upcoming weekly expiry PE option writers shows aggression. The Nifty immediate resistance stands at 17,800 and vital resistance stands at the 18,000 levels where nearly 23 lakh and 43 lakh shares have been added, respectively. On the lower side, the immediate and vital support level is at 17,500 where it added nearly 50 lakh shares.

Looking at the Bank Nifty upcoming weekly expiry data, the immediate resistance is at 37,000 where nearly 15 lakh shares were added followed by a vital resistance at 38,000 where nearly 13 lakh shares were added, whereas on the lower side, the immediate support stands at 36,500 where nearly 15 lakh shares have been added.

India VIX increased marginally by 0.06 percent from 17.69 to 17.79 over the week. Cool off in the VIX has given relaxation to the market. Further, any downticks in India VIX can push the upwards momentum in the Nifty.

Looking at the sentimental indicator, Nifty OI PCR for the week has increased to 1.012 from 0.722. Bank Nifty OIPCR over the week decreased from 0.83 to 0.688 compared to last Friday. Overall data indicates CE writers are more aggressive than PE writers in the Nifty.

Moving further to the weekly contribution of sectors to the Nifty. Most of the sectors have contributed negatively. IT, OIL, NBFC has contributed the most on the negative side in the Nifty by -97.50, -54.93, 51.53 points respectively, while only fertilizers contributed marginally on the positive side.

Looking towards the top gainer & loser stocks of the week in the F&O segment. Ambuja Cements topped by gaining over 13.6 percent, followed by M&M Financial 6.9 percent, Cholamandalam Financial 6%. Whereas L&T Technology Services has lost over -9.8%, Persistent -8.2 percent, Birlasoft -7.3 percent over the week.

Considering the upside momentum along, upcoming week can be approach with a low-risk strategy like Modified Call Butterfly in Nifty.



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