Deploy Modified Call Butterfly strategy in Nifty: Shubham Agarwal


Nifty closed the week ended June 24 on a positive note with gains of around 2.60% at 15,718. During the week, Nifty gyrated in a range of 15,748-15,202. With an increase in Open Interest (OI), long built up was witnessed in Nifty over the week gone by.

Meanwhile, Bank Nifty gained about 2.79% as it closed the week around 33,703. Bank Nifty futures gyrated between 33,738 and 32,447 in the past week.

Overall, Bank Nifty ended the week with gains of about 914 points and witnessed short covering built up on the OI front.

Further diving into the Nifty’s upcoming Monthly expiry, CE option writers are showing aggression. Nifty’s immediate resistance stands at 16,000 levels where nearly 74 lakh shares have been added followed by vital resistance at 16,500 levels where 66 lakh shares have been added.

On the lower side, the immediate support level is at 15,500 where nearly 67 lakh shares have been added followed by 15,000 where nearly 52.6 lakh shares have been added.

Let’s look at the Bank Nifty’s upcoming Monthly expiry data. On the upside, Bank Nifty’s immediate and vital resistance is at 34,000 where nearly 16L shares has been added whereas, on the lower side immediate and vital support is at 33,500 where 14.11L shares has been added.

India VIX, fear gauge, decreased 9.58% to 20.58 from 22.76 over the week. Decrease in the IV has allayed fear in market. Further, any downtick in India VIX can push the upward move in Nifty further.

Looking at the sentimental indicator, Nifty OI PCR for the week has increased to 1.04 from 0.75. Bank Nifty OIPCR over the week increased to 1.03 from 0.79 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. Private banks, NBFCs, FMCG and IT have contributed on the positive side in the Nifty by 114.05, 66.85, 87.32 and 101.73 points, respectively. Also, metal, oil and power stocks contributed 14.53, 71.77 and 10.15 points, respectively, on the negative end.

The top gainer & loser stocks of the week in the F&O segment – Hero MotoCorp topped by gaining over 11.2%, followed by Strides Pharma Science 10.4%, SBI 10.4%, Whereas Vedanta has lost over -16.2%, Hindustan Copper -8.4%, NALCO -8.3% over the week.

Considering the mild bullish mood, the upcoming week can be approached with a low-risk strategy like Modified Call Butterfly in Nifty.



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