Deploy modified call butterfly strategy in Nifty: Shubham Agarwal


Shubham Agarwal

Momentum shift witnessed from bearish to bullish in Nifty as it rebounds from 15,700 again and it closed the week on a positive note around 16,275 with significant gain of around 3 percent.

During the week Nifty gyrated between 16363 and 15740. On the OI (Open Interest) front, long buildup witnessed in Nifty over the week was gone on increase in OI.

On the other hand, Bank Nifty moved in line with Nifty as it also closed the week on significant gains of more than 3% and closed around 34305.

Bank Nifty future gyrated between 34620 and 33000 the last week. Overall, Bank Nifty ended the week with a gain of more than 1100 and witnessed short covering on the OI front.

Further diving into the Nifty upcoming weekly expiry PE option writers are showing aggression.

Nifty immediate and vital support stands at 16000 levels where nearly 79L shares has been added. On the higher side immediate resistance level is at 15300 where nearly 48L shares have been added followed by 17000 where nearly 78L shares have been added.

Looking at the Bank Nifty upcoming weekly expiry data. On the upside, Bank Nifty immediate and vital support is at 34000 where nearly 25L shares have been added whereas on the lower side immediate resistance is at 35000 where 18L shares have been added followed by vital resistance at 36000 where nearly 15L shares have been added.

India VIX, fear gauge, decreased more than 5% from 24.53 to 23.09 over the week, while it is still trading above 20.

Cool-off in the IV has decreased fear in the market. Further, any downtick in VIX can push upside momentum in Nifty.

Looking at the sentimental indicator, Nifty OI PCR for the week has increased to 1.078 from 0.726. Bank Nifty OIPCR over the week increased from 0.743 to 1.06 compared to last Friday. Overall data indicates PE writers are more aggressive than CE writers in Nifty.

Moving further to the weekly contribution of sectors to Nifty, most sectors are contributing on the positive side except IT and cement. OIL, PVTB and NBFC have contributed the most on the positive side in the Nifty by 171.22, 131.25, 49.10 points respectively, while IT and power contributed negatively to Nifty by 88.82 and 4.10 points respectively.

Looking towards the top gainer & loser stocks of the week in the F&O segment, HAL topped by gaining over 16.1%, followed by BHEL 15.9 %, and Granules 13.3% whereas Dr LalPath Lab lost over 12.70%, Metropolis 10.3%, Lupin 8.2% over the week.

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



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