#39;Deploy modified call butterfly strategy in Nifty this week#39;


Consolidation continues in Nifty even in the week gone by as it was unable to surpass the 17,500-mark. It gyrated in the range of 17,500—16,800 and closed the week on a negative note around 17,133 with a marginal loss of around 0.26%.

On the Open Interest (OI) front, short covering was witnessed in Nifty over the week gone by as there was marginal decrease in OI.

On the other hand, Bank Nifty also continued to consolidate as it closed the week on the marginal loss of 0.02%. It closed around 37,085.

Bank Nifty futures gyrated between 36,770 and 35,500, and ended the week with a loss of around 9 points. It also witnessed short covering on the OI front.

Further diving into the Nifty’s upcoming weekly expiry, CE options writers showed aggression. Nifty’s immediate resistance stands at 17,300 and vital resistance stands at the 17,500-levels where nearly 53 lakh and 45 lakh shares were added, respectively. On the lower side, the immediate and vital support level is at 17,000, where nearly 44 lakh shares were added.

Looking at the Bank Nifty’s upcoming weekly expiry data, on the upside, immediate resistance is at 36,500 where nearly 21 lakh shares were added, followed by vital resistance which is at 37,000 – with addition of nearly 23 lakh shares. On the lower side, immediate and vital support stands at 35,500, where nearly 13 lakh shares were added.

India VIX traded below 20, but increased marginally by 5% from 18.35 to 19.37. Cool off in the VIX has given relaxation to market. Further, any downtick in India VIX can push the upwards momentum in Nifty.

Looking at the sentimental indicator, Nifty OI PCR for the week has increased to 0.955 from 0.913. Bank Nifty OIPCR over the week decreased from 0.60 to 0.656 compared to last Friday. Overall data indicates CE writers are more aggressive than PE writers in Nifty.

Moving further to the weekly contribution of sectors to Nifty. There was a mixed contribution across all sectors. FMCG, OIL, and PVTB has contributed the most on the positive side in the Nifty by 26.6, 17.07, 4.42 points respectively, while only IT, NBFC and Power contributed negatively to Nifty by 50, 20.03, 10.08, respectively.

Looking towards the top gainer & loser stocks of the week in the F&O segment. Hero MotoCorp topped by gaining over 8%, followed by Persistent 7.6%, UBL 7.4%. Whereas Tata Communications has lost over -14.6%, NALCO -11.7%, Coal India -11.4% over the week.

Considering the sideways broader consolidation prevailing, the upcoming week can be approached with a low-risk strategy like Modified Call Butterfly in Nifty.



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